The Australian Tax Office (ATO), the government agency dedicated to revenue collection, has decided to delay its ruling on bitcoin, pleasing some individual taxpayers but creating uncertainty for businesses and investors.
“To ensure our advice to the community is comprehensive and robust we have sought further advice from external legal counsel.”
It will now seek that advice from Australia’s Solicitor-General Justin Gleeson.
The report says bitcoin-accepting businesses, traders and investors will now be left “in limbo”, unsure of whether they will face a backdated tax bill in future years.
Tax lawyer Reuben Bramanathan, who co-wrote the BAA’s paper detailing its recommendations to the ATO, agreed, saying it is more important for the ATO to fully understand bitcoin in Australia and the far-reaching consequences than to make a rushed decision.
“It’s positive to see the ATO engaging in a proper consultation process with the key stakeholders, who have been able to explain how bitcoin actually works and the impact on the bitcoin industry in Australia.”
The ABC quoted the Association’s Jason Williams as saying a healthy and clearly-defined operating environment for bitcoin business was more important:
“As digital currencies such as bitcoin are now a permanent part of our financial landscape, it is important for Australian regulators and legislators to foster and nurture growth.”
The ATO has, over the past year, issued a number of private binding rulings in response to individual queries. These rulings, however, are relevant legally only to the individual cases they represent.
In response to one query in June 2013 it simply said “yes” when asked if bitcoins would count as income for a business. In a subsequent (undated and since removed) case it went significantly further, saying tourists from overseas purchasing bitcoins in Australia would not be eligible for a GST (sales, or Goods and Services Tax) refund upon departure, as bitcoins were not tangible goods.
The ABC report also said Freedom of Information (FOI) requests had shown the ATO was anxious at the prospect of Australians using digital currencies to avoid paying tax.
- ^ ATO (www.ato.gov.au)
- ^ promised (www.coindesk.com)
- ^ reports (www.abc.net.au)
- ^ Bitcoin Association of Australia (bitcoin.asn.au)
- ^ recommendations (www.coindesk.com)
- ^ response (www.coindesk.com)
- ^ Ben Jeayes (www.shutterstock.com)
- ^ Shutterstock (www.shutterstock.com)
- ^ Australia (www.coindesk.com)
- ^ Australia Bitcoin Association (www.coindesk.com)
- ^ tax (www.coindesk.com)