In a submission Australian taxation professionals’ association The Tax Institute says that it is proposing for the establishment of a voluntary Bitcoin register on which individuals and companies could register a Bitcoin public address. According to them the measure aims to de-anonymise ownership of the digital currency in Australia.
The first information regarding the proposal came in when the Tax Institute came up with the submission to the Senate Economics References Committee inquiry into an appropriate framework for digital currencies in Australia. They say the register would assist in proving that the entity owns the Bitcoin held at those addresses.
Nonetheless, the organization further elaborates that this register could be administered by an existing government agency like ASIC or the ATO, which could serve as the regulator/licensing authority for businesses dealing with Bitcoin. Several suggestions have come that are going to help better tracking of the digital currency.
Develop a Solution to Track the Bitcoin Blockchain
For instance, the Tax Institute recommends the government to develop, or support the development of, systems designed to track the Bitcoin Blockchain in order for the Australian Taxation Office (ATO) to monitor transactions for taxation purposes. It also recommended the committee examine the ability of the ATO to enforce the tax outcomes intended for digital currencies, and the resources required to do so.
In the submission the institute further said that resources may need to be allocated to developing systems to effectively read and monitor the Blockchain, in combination with traditional cash-economy tax auditing techniques. Nonetheless, the institute’s suggestions follow the ATO’s guidance, released in August.
Is Bitcoin a Commodity?
The guideline suggested that it would treat Bitcoin and other virtual currencies as a commodity for business or high-value transactions over AU$10,000. Also, according to the Tax Institute an alternative interpretation of the existing tax law is that Bitcoin is treated as foreign currency. On the other hand, the ATO issued a draft GST Ruling wherein it treats transactions involving Bitcoin as barter transactions.
The ATO had then subjected Bitcoin to GST. Nonetheless, the submission from the Tax Institute the diverse views and alternative interpretation is desirable from a tax policy perspective. It believes that for certainty and consistency of treatment, it recommends that the committee consider the merits of a legislative change to confirm that Bitcoin is currency for tax purposes.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org