They will now be treated as if they are legal tender—like foreign currencies.
In 2014, Australia passed a law declaring cryptocurrencies as bartered goods, and therefore subjected them to double taxation. The law, which garnered a backlash from cryptocurrency enthusiasts, subjected cryptocurrencies to goods and services tax (GST), which meant cryptocurrencies were taxed upon purchase, and then again when used to buy taxable goods.
Although they’ve stopped subjecting cryptocurrencies to GST since July 1 this year, the law officially putting an end to the double taxation has just been passed by the parliament. They will now be treated as if they are legal tender, like foreign currencies. According to their budget department website, this is an effort to entice innovative start-ups to set up shop in the country.
“The Government will make it easier for new innovative digital currency businesses to operate in Australia. 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. Currently, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST,” they wrote.
It can be noted that the Australian government has taken up a special interest on blockchain technology. A few months ago, the government’s top research agency Data61 released two reports focusing on four possible scenarios for blockchain adoption in the country, as well as promising areas of application for the technology, and its risks.
Despite the development, StartupAUS CEO Alex McCauley thinks the government could have made more effort for start-ups. “There clearly isn’t a focus on startups or innovation in this budget. That will certainly cause some frustration, because the Government has done a lot to build expectations that it is committed to making Australia one of the best countries in the world for innovators. It still has a lot of work to do to deliver on that commitment,” he said.