By
Bhushan Akolkar
August 29th, 2022
Australia is going to cut general sales tax for acquiring digital currency, aiming to help local fintech startups run their businesses in the country.
Bitcoin will no longer be subject to double taxation, the Australian government stated in its budget summary for 2017-18. The move is part of an effort to support digital currency businesses and drive innovation in the country.
“From 1 July 2017, purchases of digital currency will no longer be subject to the GST, allowing digital currencies to be treated just like money for GST purposes. Currently, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST.”
The double taxation of bitcoin transactions in Australia caused some major operators to left the country in 2014, whilst innovation has significantly lagged behind markets that offer more freedom to digital currency companies.
The decision to remove goods and services tax was unveiled by the Australian Department of the Treasury in March, 2016. As the government said at the time, the removal of the double GST would facilitate the development and use of virtual currency.
“Innovation will drive productivity growth in Australia,” the summary reads. “The Government is committed to establishing Australia as a leading global financial technology (FinTech) hub and is announcing a new package that aims to position our local fintech industry as a world leader.”
Under the current laws, bitcoin and other cryptocurrencies are treated as intangible property rather than money. The users of digital currencies can bear GST twice: once on buying the cryptocurrency and once again on its use in exchange for other goods and services subject to the GST.
Overall, the use of virtual currency has significantly grown in Australia. The local bitcoin bill payment processor, Living Room of Satoshi, unveiled earlier this week that it processed $5 million in household bills with the digital currency.
The company was launched in April 2014 and by the end of 2015 it processed more than $1 million of bitcoin payments toward bills. According to figures over the three months, most bills paid by Australians with bitcoin are toward credit card payments, followed by telecommunications, and electricity, rent payments, and online shopping.
Last month, Japan implemented a law that recognizes the digital currency as a legal payment option within the country.
Bitcoin market is likely to benefit from the removal of double GST in Australia, as it will drive the adoption of bitcoin and will lead to the growth of its price. Meantime, the price of bitcoin continues to grow and increased by more than 33% over the last month. Two days ago, the digital currency surpassed $1,800 and is currently trading at $1762.
