Legislation to remove double taxation on digital currencies, such as Bitcoin, has been passed by Australian Parliament, with fintech industry leaders describing the news as a win for consumers and businesses.
The Treasury Laws Amendment (2017 Measures No. 6) Bill 2017 was tabled in Parliament, last month, by Treasurer Scott Morrison. He said the reform, which will apply retrospectively from 1 July 2017, delivers on the Government’s 2017-18 Budget promise to ensure consumers who use digital currency no longer have to 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.
Morrison said the reform will “further cement Australia’s reputation as a global FinTech centre” by “[making] it easier for new innovative digital currency businesses to operate in Australia.
Blockchain Global chief executive Sam Lee said the double GST treatment of digital currencies had been preventing Australia from growing its cryptocurrency payments rail, which he says will be a key pillar of the future global economy.
“The removal of double GST on digital currencies will position Australia as a great jurisdiction to be part of the rapidly growing global blockchain ecosystem,” he said.
“There’s a wealth of opportunities that this removal of the double taxation can bring to Australia. For instance, Australian investors are no longer paying a 10 per cent premium when buying cryptocurrencies.”
Lee said the passage of the Federal Government’s bill means that Australians will no longer be penalised for acquiring digital currencies.
“Australians are now able to participate in acquiring their share of over US$110 billion in the global market value of cryptocurrencies – that wealth in cryptocurrency did not exist eight years ago,”
“Australia has one of the highest per capita population with crypto currencies and with the removal of double GST, we are on track to capitalise on the momentum to create the next Silicon Valley in Australia by building out an epicenter of Blockchain IP and knowhow down under.”’
The CEO of commodity management solution company AgriDigital, Emma Weston, who is also a board member of Fintech Australia, welcomed the changes.
She said any initiative that encourages innovation with digital currencies was a huge step forward for Australian agriculture and agtech.
“In supporting the movement towards the development of digital currencies, we see the removal of the GST as overcoming a significant regulatory uncertainty in the cryptocurrency space,” Weston said.
“Australia is the perfect test market for blockchain technologies, and this move helps provide the confidence needed to make the most of the range of opportunities offered by cryptocurrencies.”
Alan Tsen, Melbourne general manager of fintech hub Stone and Chalk Melbourne and board member of Fintech Australia, said the changes will be a huge opportunity for the broader adoption of digital currencies by merchants and consumers.
“This is because there will be less friction for people to accept and pay with it,” he said. “The growing viability of digital currencies as a safer mode of payment will also make them more appealing under the new regulatory environment. A lot of people have been purchasing digital currencies as stored value but we’re seeing digital currencies becoming a more viable e-commerce payment option. It’s a much safer mode of payment especially in a time with increasing cyber security threats.”
Leigh Travers, CEO of blockchain solutions company DigitalX, said the passage of the bill puts digital currency on a “level playing field with older payments systems”.
He added, “It is a big win for the industry and for politics for getting behind innovation. This is the original reason why DigitalX co-founded the Australian Digital Commerce Association or ADCA. We wanted to co-advocate a positive policy change such as this. It is pleasing to see that the first goal of the association has now been achieved.”
