ATO delays Bitcoin ruling

The Australian Taxation Office has pushed back its ruling on how it will tax the crypto-currency Bitcoin for a second time, after outsourcing the last leg of the work to an external legal consultancy.

The long-awaited release of the digital currency guidance was due to be handed down today, but iTnews understands it is likely to be at least another month until it is completed.

“It remains our priority to provide the community with the final guidance paper in time for people to complete their 2013-14 income tax returns,” a spokesman for the ATO said.

The Tax Office advised bitcoin holders not to hold out on filing their 2013 tax returns until the decision is made, encouraging them to include the value, date, reason for and parties involved in any bitcoin transactions.

But it declined to detail how such transactions would be taxed.

The Tax Office has been conducting a wide-ranging consultation on the issue, taking in “numerous submissions” from experts, stakeholders and industry members.

The delay has come from the department's decision to hire external lawyers to take one final look over its taxation policy.

“To ensure our advice to the community is comprehensive and robust we have sought further advice from external legal counsel," the spokesman said.

“We have also received representations from industry bodies seeking to provide us with further information. These factors will delay the release of our final guidance paper on the taxation treatment of crypto-currencies."

The treatment of bitcoin for national taxation purposes is a modern headache not exclusive to Australia.

The US has already made its decision, ruling bitcoin to be property in a tax context rather than a cash currency. This means all trades must be recorded as trades in assets by taxpayers, but it also means bitcoin holdings will not generate foreign currency gain or loss for US federal tax purposes.

In Germany, however, tax authorities ruled that bitcoin is in fact a currency and thus subject to a local withholding tax of 25 percent.