Bitcoins are not "currency" - Australian Tax Office

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Written by Fred Rollo | Posted in Australia/Oceania • Capital Gains • Income Tax • Indirect Tax • Individual • International • Tax Policy • VAT

The Australian Taxation Office (ATO) has just issued a guidance paper stating: “The ATO’s view is that Bitcoin is neither money nor a foreign currency, and the supply of bitcoin is not a financial supply for goods and services tax (GST) purposes.”

Furthermore, the ATO says: “Bitcoin is, however, an asset for capital gains tax (CGT) purposes.”

For businesses that use Bitcoins (or any other crypto-currencies) to buy and sell trading stock, the transactions will be treated for tax purposes as a bartering arrangement. Buying trading stock with Bitcoins will require businesses to charge the 10% GST on the coins. Selling trading stock for Bitcoins will mean the business can claim an input tax credit for any GST paid (provided the vendor is registered for GST)>

The ATO has also issued five (5) draft rulings regarding various aspects of dealings that might be undertaken with Bitcoins.

The guidance paper (and links to the draft rulings) can be found at- https://www.ato.gov.au/printfriendly.aspx?url=/general/gen/tax-treatment-of-crypto-currencies-in-australia—specifically-bitcoin/

Fred Rollo

Director Principal of Rollo & Company Pty Ltd, a CPA practice that specialises in Australian & international tax, estate and succession planning, professional education, negotiation and mediation, mentoring – executive coaching, and higher education consulting. We also provide the Student Ombudsman Service at Macquarie University in Sydney.