Living Room of Satoshi, a Brisbane-based start-up, which enables payment of any BPAY bill using bitcoin, discontinued all operations in October because of a double GST on bitcoin transactions that strongly affected small businesses using bitcoin.
As said by Daniel Alexiuc, a co-founder and CTO of Living Room of Satoshi, “the GST ruling has not changed, but the resourceful bitcoin industry has.”
The startup offers a free service which allows users to pay BPAY bills using digital currency and makes a small profit based on the price movement on bitcoin exchanges. When Australian-based exchanges were forced by the ATO’s decision to charge users that buy bitcoin 10% of the amount that is being purchased, it gave users a huge preventative to pay bills using digital currency. The company is named in honour of Satoshi Nakamoto, the pseudonymous person who designed and created the original bitcoin software.
Looking back, Australian taxation professionals’ association The Tax Institute has proposed the establishment of a voluntary bitcoin register on which companies and individuals could register a bitcoin public address, with the aim of de-anonymising ownership of the digital currency in Australia.
In its submission, the Tax Institute also recommended that the government may need to develop or support the development of systems, designed to track the bitcoin blockchain in order for the Australian Taxation Office (ATO) to monitor transactions for taxation purposes.
“There are now many more options for small Australian businesses like ours to buy and sell bitcoins internationally and locally in compliance with the tax ruling, which has allowed us to reopen for business,” said Alexiuc. “We still firmly believe that the double GST needs to be repealed for bitcoin to be ultimately useful as a currency in Australia, but for now we can continue operating as before.”
As long as exchanges based in other markets have made it easier for Australian customers to use their services and avoid that extra cost, Living Room of Satoshi has come back and its service is feasible again.
“There are now many more options for small Australian businesses like ours to buy and sell bitcoins internationally and locally in compliance with the tax ruling, which has allowed us to reopen for business,” Alexiuc said.
Over the past two months Daniel Alexiuc has investigated moving the startup offshore, to Singapore or Hong Kong, until it became evident that international exchanges would make the business workable again.
“It’s pretty much running the same as it was before, with the same sort of service. We’ve got approval from ASIC to operate in this way, so it seems like it’s going to be sustainable for now,” he said.
“We’ve got an app coming soon which will also make things easier. But the GST is still a problem for us because businesses in Australian can’t use bitcoin the way it needs to be used. And if businesses can’t use it in Australia that makes it difficult for us in the long term. We still firmly believe that the double GST needs to be repealed for bitcoin to be ultimately useful as a currency in Australia, but for now we can continue operating as before.”