Tax Update: Australian tax and GST treatment of bitcoin and other crypto-currencies

By Matthew Cridland

The Australian Taxation Office (ATO) has released its long-awaited public guidance on the Australian tax and goods and services tax (GST) treatment of bitcoin and other crypto-currencies. This guidance was originally scheduled to be released on 30 June 2014. It was delayed while the ATO considered further submissions and sought advice from legal counsel. The issues raised in the ATO’s guidance will be relevant to all businesses considering trading or making payments with bitcoins in Australia, including businesses considering accepting bitcoins as payment for goods or services. In this Tax Update, we have summarised the ATO’s views and outlined the potential risks and options for affected businesses.

Note that in this Tax Update we have used the capitalised term ‘Bitcoin’ to refer to the Bitcoin payment system and the non-capitalised term ‘bitcoins’ to refer to the crypto-currency.

For GST-registered businesses that supply bitcoins in Australia, the ATO’s view is that: bitcoins are neither money nor a foreign currency; making a payment with bitcoins is akin to a barter transaction (potentially triggering a GST liability on the bitcoin payment); the sale of bitcoins (for example as part of an exchange transaction) is a taxable supply and subject to GST; and input tax credits (GST credits) may be available for the acquisition of bitcoins through a taxable supply…

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