Australia Tax Office Prepares to Announce its Stand on Bitcoin and Other Virtual Currencies

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Australia Tax Office Prepares to Announce its Stand on Bitcoin and Other Virtual CurrenciesThe Australian Taxation Office is preparing to announce how it will classify bitcoin transactions under the country’s taxation law after years of mulling over the tough issue of how to classify the virtual currency.

The agency fears that people could use bitcoin and other digital currencies to evade paying taxes, and matters aren’t helped further by the currency’s meteoric rise in popularity. Ever since bitcoin was created in 2009, most governments all over the world have been grappling over how to handle the currency, reported ABC News.

“I think it’s quite exciting that the tax office is actually recognising bitcoin,” said Jason Williams, president of the Bitcoin Association of Australia.”I really hope that the tax office identifies bitcoin as money and it is treated accordingly.”

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The ATO is expected to announce whether it will classify bitcoin as money just like foreign currencies or as an asset or goods. Should it fail to be regarded as money, it will be treated much similar to barter transactions, which have different taxation rates and complicated accounting procedures.

“From a merchant perspective, it will make things more complicated, or potentially more complicated. If the usability of bitcoin goes down, the industry is not going to flourish very well in Australia. In fact the opposite is more than likely true,” added Mr Williams.

The ATO, which is expected to release its ruling on how it intends to treat bitcoins before the end of the fiscal year, joins other Australian agencies such as the Reserve Bank of Australia, which is worried that bitcoins may water down its ability to influence credit creation and monetary policy. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Deepak Tiwari at deepak@forexminute.com