ATO rules Bitcoin transactions liable for GST

The Australian Taxation Office (ATO) has issued a ruling that transactions involving the digital crypto-currency Bitcoin are liable to goods and services tax.

The tax office ruled that "a transfer of Bitcoin from one entity to another is a 'supply' for GST purposes". It considers a supply of Bitcoin as taxable and not GST free under current regulation.

In exchange for goods and services, however, the ATO said a supply of Bitcoin "will be treated as a barter transaction."

The ruling does not mean the ATO considers Bitcoin to be money as such, in keeping with the agency's previous stance on the crypto currency.

"Bitcoin is not a legally recognised universal means of exchange and form of payment by the laws of Australia or the laws of any other country. Therefore, it is not ‘currency (whether of Australia or of any other country)’ under paragraph (a) of the definition of ‘money’, the ATO wrote. 

That definition however is marked as "not legally binding" by the ATO.

The taxation office released its guidance on Bitcoin in August this year, in which it ruled that Bitcoin trading outside a business context would not be assessed as taxable income for individuals.

Furthermore, the ATO put Bitcoin in the same tradeable assets category as art, jewellery, gold and shares. 

These do not attract capital gains tax as long as the values remain beneath the A$10,000 threshold for personal use.

ATO GST Bitcoin ruling (pdf)