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NEW TAX ARRANGEMENTS ON DIGITAL CURRENCY EFFECTIVE FROM 1 JULY 2017

Friday, 21 July 2017

The Government has confirmed that it will remove double taxation of digital currency – a move which was foreshadowed in the May Budget.

The change will have effect from 1 July 2017 although legislation implementing the change is yet to pass parliament.

The Government said it is making it easier for digital currency businesses to operate in Australia.
A Treasury statement notes that as part of the 2017-18 Budget, the Government announced it would remove the double taxation of digital currency from 1 July 2017. The Budget announcement reaffirmed the Government’s commitment in March last year to address the ‘double taxation’ of digital currency in the GST law in the Treasurer’s statement ‘Backing Australian FinTech’.
The Treasury statement said that from 1 July, digital currency is being treated “just like money for GST purposes”.
“Currently, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST.
“The Government has released exposure draft legislation and explanatory material for amendments to give effect to the Budget announcement. The legislation would have a retrospective start date of 1 July 2017.
“Public consultation on the exposure draft legislation and explanatory material will run for four weeks, closing on Wednesday 26 July 2017. The purpose of public consultation is to seek stakeholder views on the draft legislation and explanatory material.
“The Government has worked with industry to identify the best option to reform GST law to remove the double taxation,” the statement says.”
In May last year the Government released a discussion paper entitled GST treatment of digital currency that outlined potential approaches to remove the double taxation.

 

Click below to view source

Treasury Discussion Paper: GST treatment of digital currency

Fairfax Media: Digital currency frenzy crashes Coinbase exchange

Computerworld.com.au: Government to end ‘double taxation’ of bitcoin (March 2016)

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