The conservative government of Australia has introduced a bill to remove double taxation of digital currencies, applying retrospectively from July 1st 2017, Treasurer Scott Morrison said in a statement.
“The Bill will ensure that Australians are no longer charged GST on purchases of digital currency, allowing it to be treated the same way as physical money for GST purposes,” Morrison stated.
This is one of the first parliamentary legislation on digital currencies specifically, with USA’s congress expected to move in the same direction after the introduction of a bipartisan bill to remove IRS’s double taxation.
The situation in Australia, however, may be somewhat different because the bill is introduced by the government itself and “was unanimously approved by the States and Territories,” according to Morrison, therefore it is expected to easily pass.
Morison says Australia has ambitions to become a global Fintech center, telling MPs that “the current GST treatment of digital currency is an obstacle to the growth of the financial technology industry in Australia.”
Digital currencies, like bitcoin and ethereum, are currently taxed twice in the country. Once when you buy it, and then for a second time when you use it to buy goods, which are subject to a Goods and Services Tax (GST).
GST will no longer apply when purchasing goods or services with bitcoin, eth, or other digital currencies once the bill passes, with the currencies so treated, in effect, like any national currency.
Moreover, there appears to be no limit on the amount of spending that’s excluded from GST, unlike Congress’s bill which limits it to a very low sum of $600. Morrison said:
“The Turnbull Government has provided strong support for the FinTech industry – allowing tax concessions to encourage investments in early-stage start-ups, legislating a crowd-sourced equity funding regime, announcing measures to encourage new challenger banks as well as creating a regulatory sandbox which encourages businesses to test innovative financial services without facing the costs of regulatory licensing.”
The Trunbull Government came into power in September 2015 through a coalition of center-right conservative parties. Which means most of the Anglosphere is now ruled by conservatives that tend to be slightly more aligned with this space.
That’s particularly shown by Britain’s approach, which had great foresight in 2014 in backing this space and now reaps the rewards as London’s Fintech continues to boom, expecting to raise $3.3 billion this year.
Since the conservatives came to power in Australia, they have largely followed the same approach, launching a regulatory sandbox and tax incentives.
It remains to be seen whether the Trump republican administration will join in following the same approach.
No decision has yet been made which affects this space by the republican’s conservatives, so the situation remains somewhat unclear at this stage. But there are many backers of this space in the Trump administration, so it is expected to be much more friendly.