According to existing Australian laws and policies, all traders and investors of cryptocurrencies such as Bitcoin and Ethereum are potentially liable for the goods and services tax (GST).
As such, digital currency users in Australia are again taxed for the GST that’s charged on the currency used in the transaction.
The double taxation for cryptocurrencies has received heaps of criticism from the local Bitcoin investing community in Australia.
And the policy raises some serious questions on the country’s open participation in the FinTech industry.
In a bid to solve this problem, the government has just announced a plan to scrap off taxes charged at the time of purchase.
The Australian government proposes to regulate Bitcoin exchanges through a bill that, if passed, would streamline digital currency investments and cement the country’s reputation in the global FinTech market.
According to a statement from Australia’s treasurer Scott Morrison, the legislation will ensure investors no longer pay GST taxes subject to using digital currencies, just as normal transactions using physical money.
The amendment on Bitcoin taxation laws will retrospectively apply from July 1, 2017, in line with the year’s budget announcement.
This comes after digital currencies gained a tax cut in the 2017 federal budget, which is largely part of the country’s wider FinTech-friendly agenda.
As such, the Australian parliament will need to approve the bill before it is enforced as a national law. However, it is not clear when this bill will be up for debate or revision.
The Australian government bodies follow a bicameral legislature, which means that both chambers must approve the legislation before it advances for actual implementation as national law.
However, the local Bitcoin community, along with the broader cryptocurrency ecosystem, is sure to get a boost as future transactions become less expensive and gain parity through fiat money transactions.
The bill, once approved by parliament, will eliminate obstacles to the growth of digital currency businesses, thus promoting the Australian financial technology industry.
The Turnbull Government has been providing great support for the FinTech industry by allowing grants to encourage startup investments.
Apart from working closely with Australia’s FinTech sector to develop these reforms, the government is set to create a crowdsourced equity funding regime and abolish licensing costs to encourage businesses and promote innovative financial services.
It is clear that the conservatives are working to place Australia as a global FinTech center. Ever since they came to power, they have been launching regulatory measures on tax incentives.
The step is one of the very first pieces of parliamentary legislation on cryptocurrencies specifically, with the United States Congress expected to make a similar move after introducing a bipartisan bill to remove double taxation by the Internal Revenue Service.