ATO: Bitcoin is Neither Money nor a Foreign Currency

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ATO: “Bitcoin is Neither Money nor a Foreign Currency”

ForexMinute.com – The growing adaption of Bitcoin and other cryptocurrencies around the world are certainly giving nightmares to the fiat-supporting governments. Earlier, we have seen finance regulators either banning or simply regularizing the cryptocurrencies as per their wishes – the recent one being NYDFS. And now it is Australian Taxation Office (ATO) which is tightening its belts to drop bombs on the local cryptocurrency-centered businesses, literally.

The facts on this report can be found in the much-anticipated guidelines, released today by Australian regulators, citing Bitcoin and similar cryptocurrencies as an asset for capital gains tax (CGT) purpose. This simply means that ATO is not considering these widely adapted coins as either money of foreign currency. Thus, the taxes imposed on them are designed by keeping the CGT environment in mind.

As expected, the real victims of the latest regulations are once again the Bitcoin-centered businesses operating in Australia. Intentionally or unintentionally, ATO has been successful in resisting the growth of these businesses by drilling fears inside the entrepreneurs’ minds. There will be no surprise if most of them decides to move offshore to a Bitcoin-friendly state or country.

The real trouble that has surfaced for Australian cryptocurrency businesses is double taxation. While customers using digital currencies to buy goods are excused from paying the GST (below $10,000 transactions), the businesses selling goods in exchange of digital currencies are made liable to pay it with no maximum transaction limits.

In simple words, if you are buying Bitcoin in Australia, you are obligated to pay 10% tax on the purchase including the GST on the service, plus other fees as well. This is a big setback for an industry which is still far from gaining world adaption from day-to-day merchants and customers. These tax complexities will simply shoo away the potential Bitcoin businesses as well.

“The way they’ve chosen to interpret how it should be applied is unfortunately very stifling for emerging Australian digital currency businesses and the industry as a whole,” said Ron Tucker, one of the members of Australian Digital Currency Commerce Association. “I’ve already heard from a number of our members that they are in the process of – or already have or will be – setting up shop offshore,” he added later.

To contact the reporter of the story: Yashu Gola at yashu@forexminute.com

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