The Australian government has renewed its commitment to end bitcoin double taxation in response to the Productivity Commission’s Inquiry. It has been over a year since Treasurer Scott Morrison made the promise to act quickly on changing the country’s goods and services tax (GST) law.
By Kevin Helms -
Bitcoin.com recently reported that the Australian government’s efforts to change the GST law to end the double taxation of bitcoin were stalled. While this issue was a priority last year, according to the Australian fintech industry, it has not been one this year.However, that may be changing based on a report released on Thursday by the Australian Minister for Small Business, Michael Mccormack MP. The 37-page report outlines the Government’s response to the “Inquiry into Business Set-up, Transfer and Closure” launched by the Productivity Commission. The role of this government’s independent research and advisory body is to help governments make better policies for the Australian community. The report reads:
The Commission found that restrictions on new business entry come in many forms. Governments, at all levels, should identify and reform restrictions that are deliberately or inadvertently anti-competitive.
Areas such as taxation, including the GST tax, “is a major concern” for businesses, the report notes, adding that these factors “can dissuade new business entrants, stymie business expansion or hasten closure.”
Bitcoin Recommendation Has Government’s Support
The Commission put forth a list of recommendations to which the government responded in four ways. It either supports the recommendations fully, supports “in principle” only, notes the recommendations, or does not support them altogether.One of the Committee’s recommendations states:
Digital currencies, such as bitcoin, should be treated as a financial supply for GST purposes. This would require that the definition of money be updated to include digital currency in both Division 195 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) and relevant GST Regulations.
“The Government supports this recommendation,” was the response to the above statement. The report further clarifies that “the Government agrees that consumers should not be subject to the GST twice when using digital currency to purchase goods or services.”
Amending GST Act is a Fintech Priority
In March last year, the government released the Backing Australian Fintech statement to address the double taxation of digital currencies. It also established a Fintech Advisory Group “to advise the Treasurer directly on issues important to Australia’s fintech industry, such as identifying areas of potential future reform, and ensuring that the specific priorities of the industry are considered in the implementation of government policies.”One of the fintech priorities outlined in this report was to amend the GST Act of 1999 to recognize bitcoin as money. The government acknowledged the recommendation and also suggested that “AML/CTF laws should apply to digital currencies.”Thursday’s report confirms that “the Government is working with the Fintech Advisory Group on options to reform the current GST treatment of digital currencies.” However, “any change to the GST treatment of digital currencies is subject to formal state and territory agreement,” the report concludes.
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