The federal budget on Tuesday night announced that the purchase of digital currencies like Bitcoin will no longer be subject to GST.
From July 1 , 2017, digital currencies will be treated the same way as physical money for GST purposes. That means the current situation, where someone pays GST twice – first on the purchase of the cryptocurrency, then a second time when spending it on goods and services – would no longer apply.
The decision is a turnaround from just three years ago, when the Australian Taxation Office ruled that GST must be charged when businesses supply Bitcoin. That decision unsettled startups such as Living Room of Satoshi, which allows Australians to pay everyday bills using digital currencies.
Even before the budget announcement, Living Room of Satoshi founder Daniel Alexiuc said that cryptocurrencies were now in high demand.
“Bitcoin is experiencing rapid growth in 2017 due to its nature as an ‘uncorrelated asset’,” he said.
“As an investment it does not appear to be affected by movements in other currencies or precious metals, by global sharemarkets, or by any particular industry or government. This makes it highly sought after by hedge fund managers and individuals looking to diversify their wealth.”
PoweredLocal chief Michael Jankie agreed Tuesday night the cryptocurrency markets are “exploding” and added that the take-up would boost mainstream adoption of the related blockchain technology.
“There is no doubt that there are huge innovations ahead in this technology. The long-overdue change in the double-taxation of cryptocurrencies is a giant-leap forward in adoption and innovation here. Very glad to finally see that this has been resolved,” he said.