Everyone thought that bitcoins would remain untraceable and out of the reach of national revenue collections. This belief has proved to be fairyland. The Australian Tax Office now values bitcoins as assets to be included on your yearly income tax form.
If you have millions of these things when there value increases you will have to give part of it to the Australian Tax Office (ATO) if you reside in Australia. Don't think that this is the end - it is just the beginning. Other countries are looking at making bitcoins taxable income.
BitPos an Australian company which arranges an exchange and purchasing service for people dealing in bitcoins say owners have to pay the Goods and Service Tax (GST) on the full value of coins not just on the fee. This is when buying the actual "currency" itself.
Because dealers say bitcoin it is not a currency it opens the door for countries to interpret it as they like. It is possible some jurisdictions will class it as currency and capital investment. Indeed, some countries could make bitcoins illegal. This would throw a spanner in the works.
The ATO has issued a warning to businesses that purchases of goods and services with bitcoins must be recorded in the books and the government is planning to collect GST on it. Essentially, the currency is going to be taxed twice. Banks praise this because bitcoin is a treat to them.
Businesses do not know whether it is legal to charge the GST at the moment. It could be levied on them when they have not collected it from customers. This is a gray legal area at present. Charging for GST when it not yet payable could be classed as price gouging, a trick to charge more.
Businesses do not know whether it is legal to charge the GST at the moment. It could be levied on them when they have not collected it from customers. This is a gray legal area at present. Charging for GST when it not yet payable could be classed as price gouging, a trick to charge more.
✴ Economics by Ty Buchanan ✴
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