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Australia Public Consultation on GST Treatment of Digital Currency — Orbitax Tax News & Alerts

On 29 June 2017, the Australian Treasury launched a public consultation on the Treasury Laws Amendment (2017 Measures No. #) Bill 2017. The legislation would amend the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and the A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations) to ensure that supplies of digital currency receive equivalent goods and services tax (GST) treatment to supplies of money and address issues of double taxation. 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 following is a summary of the proposed legislation as provided in the explanatory memorandum:

  • The proposed amendments would provide that supplies and acquisitions of digital currency are generally disregarded for the purposes of GST. Consistent with supplies of money, supplies of digital currency would only be recognized for the purposes of GST if the supply is made in exchange for money or digital currency. Also consistent with supplies of money, supplies of digital currency that are recognized for the purposes of GST would be input taxed.
  • For the purpose of these amendments, digital currency means fungible digital units of consideration that do not have a value based on the value of any other thing or associated entitlements.
  • The amendments make a number of additional changes to ensure consistent treatment between money and digital currency.  

As proposed, the draft legislation would have a retrospective start date of 1 July 2017.

Click the following link for the Treasury consultation page, which includes links to the draft legislation and the explanatory memorandum. The closing date for submissions is 26 July 2017.