Australia to drop tax for digital currency purchases
The Australian government's 2017 federal budget will remove the Goods and Services Tax (GST) from digital currency purchases, so bitcoin and other digital currencies will be treated as if they were dollars. From 1 July, digital currency purchases will no longer be eligible for the 10% GST and this change should help the digital fintech sector grow further in Australia. The tax still applies when exchanging digital currencies for goods and services.

From 2017, Bitcoin And Other Digital Currency Will No Longer Be Taxed Twice In Australia

As part of its push to foster innovation and fintech startup businesses in Australia, the government’s 2017 Federal Budget will cut the GST for purchases of digital currency, allowing Bitcoin and online games’ in-game money to be treated just like plain Australian dollars for tax purposes.

At the moment, anyone purchasing a digital currency in Australia is technically liable for GST expenses on that purchase. From 1 July 2017, though, the government is exempting purchases of digital currency from Australia’s 10 per cent Goods and Services tax. The announcement was made in March of last year, and in 2014 the ATO said small-scale traders — below $10,000 — would not be charged GST on their transactions.

GST still applies when exchanging those digital currencies for other goods and services that are themselves subject to the GST, of course. The government confirmed the removal of GST on digital currencies in its innovation and fintech fact sheet.

In the government’s budget measures paper, removing GST on Bitcoin was called out as being useful while not costing the Federal Government any significant revenue: “Removing double taxation on digital currencies will remove an obstacle for the financial Technology (fintech) sector to grow in Australia. This measure is estimated to have a small but unquantifiable decrease in GST collections and associated payments to the States and Territories over the forward estimates period.”

Startups aren’t happy with the work the government has done, though. CEO of startup advocacy group StartupAUS Alex McCauley: “There clearly isn’t a focus on startups or innovation in this budget. That will certainly cause some frustration, because the Government has done a lot to build expectations that it is committed to making Australia one of the best countries in the world for innovators. It still has a lot of work to do to deliver on that commitment.

From the budget’s fintech fact sheet: