Michaela Merz

Australia – tax guidance on bitcoin published on 20 August 2014

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The Australian tax authority released a number of draft tax determinations and a guidance paper, in which it states that bitcoin and other cryptocurrencies are not money or foreign currency for taxation purposes. It is the view of the Australian Taxation Office that:

  • Bitcoin used in business is akin to a barter transaction, whereby one asset (bitcoin) is exchanged for another asset or services.
  • Income from mining bitcoin (provided that the taxpayer is in the bitcoin mining business) is included in the taxpayer’s assessable income, and expenses incurred in respect of the mining will be deductible.
  • Bitcoin may be trading stock where it is held for the purpose of sale or exchange in the ordinary course of a business.
  • Bitcoin is a CGT asset, however the treatment of bitcoin used for personal purposes (e.g. for acquiring goods and services) is similar to the treatment of other assets, whereby any capital gain or loss from disposal of the bitcoin is disregarded provided the cost of the bitcoin is AUD 10,000 or less.
  • Salary or wages paid in bitcoin will be treated as a fringe benefit and subject to the Fringe Benefits Tax.
  • Transfers of bitcoin are supplies for GST purposes, but not financial supplies.

For further information please feel free to contact: Tom Seymour, Email: tom.seymour@au.pwc.com

 

 

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