Australia ignores Bitcoin at its peril

Australia ignores Bitcoin at its peril

No Bitcoins here please, we’re AustralianNo Bitcoins please, we're Australian

If you’ve been following the ups and downs of Bitcoin and you’re in Australia then you probably know that Australia is lagging behind many of the world’s leading economies in recognising that Bitcoin is what it actually is – a currency.  Furthermore, it should be treated as such.

The Australian Tax Office last August released a paper on how to treat crypto currencies.  Essentially, when you buy bitcoin from and Australian party, it is a taxable supply, so you will be charged GST.  When you sell it, unless you are a business or individual registered for GST, then you will not have GST applied.

Ouch.

This has meant that for individuals, buying bitcoin in Australia from and Australian company incurs a 10% tax. Way to go Mr Taxman. We know that the country is drowning under the pressure of the end of the commodities boom and government spending largesse, however smacking the currency of the future with a 10% premium will just drive the business out of Australia.  And that’s what it is doing.

Australian company CoinJar is Australian no longer, having been forced to endure the crapulous regulations enforced by the ATO, CoinJar has moved.  Left the country.  Is Australian no more.

The company has now moved to the sunnier shores of mother England where the powers that be have recognised that digital currencies should not be subject to VAT transactional taxes. From there, they can grow, develop and be all that they can.

Meanwhile, back in the colonies, we’re bound to lose more companies in due course.  A sad state of affairs indeed.

There are many benefits to a digital currency, the biggest hurdle is acceptance and integration with the more traditional fiat money system. Yes, there are transactional hurdles as well within the technology, however again, transactional processing power problems can be solved creatively through technology.  The fear that government’s have of cryptocurrencies is probably well founded in that it is something over which they have no control. Then again, that, in and of itself is all the more reason to support Bitcoin isn’t it?

Whilst the Australian government is looking at digital currencies and Australian UK companies like CoinJar have made submissions, until such time as the ATO takes it’s blinkers off and lifts its head to look at the future, Australia will continue to see businesses think twice about utilising digital currencies, or will, like our friends CoinJar, move overseas where there is a little bit more of a view that digital currencies are a part of our future.

One can only hope that the boffins in Canberra will indeed eventually work it out.

A.