Australia seeks to treat bitcoin as fiat money

australia-seeks-to-treat-bitcoin-as-fiat-moneyThe Australian government has suggested that bitcoin and other cryptocurrencies should be treated as fiat money for the purposes of goods and service tax (GST).

The Senate Economics References Committee (SERC) released a report on Tuesday titled Digital currency-game changer or bit player, which recommended amending the Australian Taxation Office’s (ATO) decision in August 2014 to treat digital currency as a commodity, “neither money nor a foreign currency,” and should be taxed accordingly.

The committee took the view that the current ATO treatment of bitcoin creates a double taxation effect, resulting in additional burdens for companies.

“Without a doubt, the main benefit will be the confidence and certainty that removing a GST will provide to our own digital entrepreneurs, and the foreign businesses who want to set up here. The Treasury ministers need to work with the states to make the changes necessary to bring our legislation into the 21st century,” Labor Senator Sam Dastyari, who chairs the committee, told the Australian Financial Review.

SERC received submissions from 48 groups and individuals, including the Bitcoin Foundation and the Bitcoin Association of Australia.

The final ruling from the SERC into digital currency is set to be submitted to the Australian senate on August 10. If approved, Australia will join the UK in recognizing bitcoin as a fiat currency. Last March, Britain’s HMRC tax authority stopped charging value-added tax (VAT) on bitcoin transactions. The switch attracted cryptocurrency companies such as Australia’s biggest bitcoin firm, Coinjar, which was among those that moved their headquarters to the UK.

“If it is defined as a global currency, this would be a positive step to encourage the bitcoin market to continue innovating,” said Coinjar CEO Asher Tan. “The Australian bitcoin market will significantly improve.”