Update (10:55 GMT, 18th December 2014): The ATO today released its final ruling on taxation of digital currencies, with the majority of the draft version’s important provisions still intact. Most importantly, goods and services tax (GST) will still be imposed on bitcoin exchanges, leading to double taxation if those bitcoins are then spent on goods or services.
The Australian Tax Office (ATO), the government agency dedicated to revenue collection, has decided to delay its ruling on bitcoin, pleasing some individual taxpayers but creating uncertainty for businesses and investors.
Now, as ABC News reports, an ATO spokesperson has said the office is delaying its ruling to further consider the many submissions it has received, and to ensure its decision was legal:
“To ensure our advice to the community is comprehensive and robust we have sought further advice from external legal counsel.”
The ATO will now seek that advice from Australia’s Solicitor-General Justin Gleeson.
It is still hoped the office will produce a definitive ruling in time for Australia’s tax return deadline for 2013-14 , on 31st October.
The news report suggests bitcoin-accepting businesses, traders and investors will now be left “in limbo”, unsure of whether they will face a backdated tax bill in future years.
The Bitcoin Association of Australia (BAA), the Bitcoin Foundation’s local chapter, said it was disappointed, but also glad the ATO was not rushing to a decision.
Tax lawyer Reuben Bramanathan, who co-wrote the BAA’s paper detailing its recommendations to the ATO, agreed, saying it is more important for the ATO to fully understand bitcoin in Australia and the far-reaching consequences than to make a rushed decision:
“It’s positive to see the ATO engaging in a proper consultation process with the key stakeholders, who have been able to explain how bitcoin actually works and the impact on the bitcoin industry in Australia.”
ABC News quoted the Association’s Jason Williams as saying that a healthy and clearly defined operating environment for bitcoin business was more important:
“As digital currencies such as bitcoin are now a permanent part of our financial landscape, it is important for Australian regulators and legislators to foster and nurture growth.”
The ATO has, over the past year, issued a number of private binding rulings in response to individual queries. These rulings, however, are relevant legally only to the individual cases they represent.
In response to one query in June 2013 it simply said “yes” when asked if bitcoins would count as income for a business.
In a subsequent (undated) case, it went significantly further, saying tourists from overseas purchasing bitcoins in Australia would not be eligible for a GST (sales, or Goods and Services Tax) refund upon departure, as bitcoins were not tangible goods.
The ABC report also said Freedom of Information (FOI) requests had shown the ATO was anxious at the prospect of Australians using digital currencies to avoid paying tax.
Disclosure Read More
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.