Govt finally ditches double taxation on Bitcoin

Bitcoin enthusiasts will no longer be forced to pay the goods and services tax (GST) twice when transacting with the virtual currency from the middle of this year.

The government revealed in its 2017-18 budget that it would remove the double GST treatment from digital currencies from July 1.

It first made the promise in March 2016 but did not set a date for the change.

Until now digital currency had been treated as intangible property for GST purposes.

It stemmed from a 2014 tax office decision that everyday Bitcoin investors would not be taxed for using the currency below a $10,000 threshold.

But the guidance meant GST would be charged twice: for the goods or service provided, and also for the supply of the digital currency used to pay for them.

A year later, however, the senate economics references committee recommended Bitcoin be treated as a normal currency for GST purposes, and not as an intangible asset as classified by the ATO in its 2014 guidance.

Removing this double taxation would “ensure purchases of digital currency will remove an obstacle for the fintech sector to grow in Australia”.

The government said the measure would have a “small but unquantifiable decrease” in the Commonwealth’s overall collection of GST.