The Australian government’s 2017-18 Budget was released on Tuesday, and cryptocurrency enthusiasts in the country have at least one provision that should put a smile on their faces. After more than a year of waiting for the government's promised GST tax relief to materialize, Bitcoin users will no longer need to worry about the existing double tax on the digital currency. The government’s new policy as of July 1, 2017 will see digital currency taxed in the same way that more traditional fiat currencies are treated.
The Budget text notes that digital currency is presently subject to the same sort of GST tax regime used for intangible property. As a result, “consumers who use digital currencies as payment can effectively bear GST twice: Once on the purchase of the digital currency and again on its use in exchange for other goods and services subject to GST.” By changing that dynamic, the government hopes to encourage greater growth in Australian FinTech:
“This measure will ensure purchases of digital currency are no longer subject to the GST. Removing double taxation on digital currencies will remove an obstacle for the Financial Technology (Fintech) sector to grow in Australia."
The new policy will address an issue that has been a priority for many in the country's digital currency and business communities. One Senate committee report last August went so far as to declare that the double-taxation issue was among the most important issues confronting Australian businesses that accept digital currency.
In practical terms, the change means that digital currency users will no longer be taxed when they purchase the currency. As the government’s budget summary explains, “From 1 July 2017, purchases of digital currency will no longer be subject to the GST, allowing digital currencies to be treated just like money for GST purposes.”