The Australian government has just introduced a bill that wants to eliminate the burden of double taxation on cryptocurrencies. This is a step in the right direction and shows that the country is forward looking when it comes to digital currencies.
The status quo currently has Australians liable for a goods and services tax when they perform any transactions in cryptocurrencies (buy or sell). Many cryptocurrency users in the country viewed this as unfair and have raised it with the government on a number of occasions. The government took notice and hence in March 2016, introduced a plan to resolve the issue by removing the tax at the purchasing stage.
When revealing the country’s budget report, they included the tax cut in it. In an announcement on the 14th of September, the Australian treasury mentioned that this would be long term positive for the Fintech sector and place Australia at the forefront of innovation.
The Bill will ensure that Australians are no longer charged GST on purchases of digital currency, allowing it to be treated the same way as physical money for GST purposes. The law change will retrospectively apply from 1 July 2017, in line with the 2017 Budget announcement
It was also the hope by the government that the bill would allow other digital currencies and financial technology to operate in Australia which could in turn boost jobs and innovation.
The budget also gives guideline as to how new businesses are encouraged to join particular sandboxes that can help them with early start-up funding. In order to help these start-ups, the government has introduced tax incentives for these qualifying fintech start-ups.
Bitcoin on the rise Down Under
Australians are eager adopters of Bitcoin technology. For example, the country now has a total of 13 Bitcoin ATMs which allow citizens to withdraw cash for coins. There are also a number of local exchanges such as Coinloft and Trade Australia.
All of these business have also formed the Australian Digital Currency Association (ADCCA) which is an industry body that lobbies on behalf of its members. This was the same body that helped submit the complaint to the treasury about the double taxation of the coins.
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