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Bitcoin inquiry to be launched by Senate, GST under spotlight

The Senate’s Economics References Committee, chaired by NSW Labor Senator Sam Dastyari, will launch an inquiry into cryptocurrencies such as bitcoin.

The inquiry comes around a month after the Australian Taxation Office (ATO) released a guidance paper stating that virtual currency was not considered money, and that a goods and services tax (GST) would be applicable.

The ATO’s guidance paper announced that a double-tax would be imposed, with a capital gains tax being placed on top of the regular 10 per cent GST.

Bitcoin exchange services have started to apply tax in accordance to the ATO’s guidance.

CoinJar, one of Australia’s more prominent bitcoin companies, began charging 10 per cent GST from midnight this morning.

“When you buy bitcoin in Australia, the price quoted to you will include 10% GST, which the seller must pay to the ATO,” CoinJar states.

“When you convert bitcoin to Australian dollars, the guidance is more complicated. If you are not a GST-registered business, GST will not apply when you place a sell order.”

“However, if you are a GST-registered business you may need to collect the GST as part of your sales.”

CoinJar makes no qualms as to where the company stands on the ATO’s GST regulations.

“We don’t believe the ATO’s guidelines are ideal for bitcoin in this country,” the company says. “We believe in a simpler financial system, and we will continue work with the ATO to help them discover a fairer position.”

CoinJar users have voiced their thoughts on the company’s website, with most comments describing the tax as a negative next step for virtual currency.

“This is going to kill the future of bitcoin in Australia,” writes one user.

“It still amazes me how the ATO has ruled, effectively labelling bitcoin a good or service? It is neither and all they have done is sabotaged another great Australian business,” writes another.

The Senate’s Economics References Committee will put forth their findings in March 2015.

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Guillermo Troncoso

Guillermo Troncoso

Guillermo is the Editor of Dynamic Business and Manager of film &amp; television entertainment site ScreenRealm.com. Follow him on <a href="https://twitter.com/gtponders">Twitter</a>.

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