Dr. Craig Wright isn’t just the inventor of Bitcoin, he’s also been an influential force on how governments have perceived the digital currency. In his latest article on his new website, titled “The GST Story,” Dr. Wright tells the tale of the time he convinced Australia that the goods and services tax (GST) should not apply to Bitcoin.
If you’re unfamiliar with how GST works, Australia’s Taxation Office (ATO) website describes it as “a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.” When, in 2014, the government argued that this tax should apply to Bitcoin, Wright had to take the position that money, which is what Bitcoin is, should not be treated as either a good or a service. So he came up with a plan:
“I took around 31,000 XBT (Bitcoin), which was valued at around AU$30 million, and used the private ruling system to force the government into making a decision as to how they would treat Bitcoin and to show them that placing GST on money was rather insane.”
By conducting trades in Singapore, and then bringing the AU$30 million (approximately US$28 million at the time), a GST tax of AU$3 million would have applied. The scheme itself, simply because of fluctuations in price and trading fees, was guaranteed to cost Wright AU$50,000.
The result was almost comical. Wright notes, “It was a rather surreal experience; the poor guy at the counter of the tourist refund centre did not know what to do. The computer had a field in the database that had a maximum value of $9,999,999.99, and he could not enter the amount that I was taking.”
Although the ATO tried to tax him on the amount, Wright filed for a refund and a private ruling. Thankfully for all Australians, the scheme worked. “So, for all of you have used bitcoin between 2014 and 2017, the fact that you haven’t been paying GST on it is something you can thank me for,” he concludes.
Wright also tells an important story of his companies’ tax situation in 2014-15, and how they had to navigate Australia’s Research and Development tax incentives. It’s worth heading over to read in full.
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