Around the world, regulators are realising bitcoin is money

Bitcoin functions like money, but the ATO treats it as a commodity for tax purposes. Benoit Tessier/Reuters

The tax treatment of digital currencies is a challenge for governments around the world, as it is for other aspects of the “disruptive” digital economy, writes Miranda Stewart.

In October 2014, the Commonwealth Senate Economics Committee launched an inquiry into digital currencies. The Committee released its report last week, with a particular focus on tax.

Last year, the ATO published several rulings outlining how bitcoin and similar cryptocurrencies should be treated under the Australian income tax and GST regimes.

The rulings provided useful clarity on bitcoin’s tax treatment, but the ATO’s approach received widespread criticism.

Bitcoin purportedly functions as money, but the ATO rulings treat bitcoin as a commodity for tax purposes. This disparity creates a number of tax inconsistencies.

The impact is particularly acute under the GST regime, where bitcoin transactions are taxed as barter transactions. Australia’s GST regime applies somewhat clumsily to barter transactions, which may cause double taxation, or at least double tax administration, as we emphasised in our submission.

Read the full article at The Conversation

Updated:  29 March 2024/Responsible Officer:  Crawford Engagement/Page Contact:  CAP Web Team