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:
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:
ABC News quoted the Association's Jason Williams as saying that a healthy and clearly defined operating environment for bitcoin business was more important:
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.
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.
The leader in news and information on cryptocurrency, digital assets and the future of money, 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. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.