Last updated on January 2nd, 2018 at 12:00 am
The Australian Senate’s Economics References Committee reviewed the status of digital currencies in the country in a recent report. Their finding is that all cryptocurrencies should be treated as currency for the purposes of Goods and Services Tax (GST), rather than the previous definition of intangible assets implemented by the Australian Taxation Office (ATO).
The previous regulation defined by the ATO was not welcomed by the Bitcoin business community in Australia, with many businesses criticizing the decision and threatening to move to other cryptocurrency-friendly countries to avoid financial penalties.
The report recognized that the previous stance was affecting Bitcoin business owners and putting unnecessary pressure on new startups.
Senator Sam Dastyari, who chaired the committee, said that:
“Without a doubt, the main benefit will be the confidence and certainty that removing a GST will provide to our own digital entrepreneurs, and the foreign businesses who want to set up here. Most importantly, it will send the message to local tech entrepreneurs that their government is listening to them, and that in itself is a major step forward.”
The new ruling is said to have a massive impact among the Australian crypto community. The change will not only affect Bitcoin exchanges but basically all businesses that deal with digital money.
[tweet_box design=”default”]The Australian Senate’s Economics References Committee has decided that all cryptocurrencies should be treated as currency for the purposes of Goods and Services Tax.[/tweet_box]
Jason Williams, president of the Bitcoin Association of Australia and co-founder of BitPOS, told 99Bitcoins that “the result of the Australian government’s inquiry is indeed a great and positive step toward the future. It, of course, has no immediate effect on what the ATO has ruled on, however, sets the tone for the near future.”
“This ruling has been a long time coming and is a credit to everyone in the Bitcoin community who have lobbied and brought Bitcoin into the mainstream,” he added.
Williams also mentioned how excited the Australian Bitcoin community is. “We have a telegram (IM pray) group that has a lot of people from the Sydney and members of the Aussie community in it. When I logged in to check messages this morning, there was a lot of buzz around this. The community really has argued long and hard for the government to take a positive position on Bitcoin. We’re proud Aussies and we really want Australia to be seen as a world leader in the cryptocurrency space. This is indeed a great, positive step in that direction.”
Although the ruling has not been passed by the Senate yet, the Senate is expected to make the recommendation in a few days, according to the Australian press. Dastyari also said that at the moment full support is not available for regulating Bitcoin, as some representatives want to actually test and see what financial opportunities Bitcoin technology offers rather than to push it away with regulation.
The detailed report with 74 pages also mentions the risks involved with regulations and acknowledges that more research and work needs to be done regarding digital currency for it to regulated by the Australian Securities and Investments Commission and other authorities.
The review has received responses from almost 48 companies and individuals suggesting and sharing their knowledge about cryptocurrency. The most prominent response has been from Ripple Labs: “harmonizing a global standard for digital currencies could provide clarity and an even playing field for technologists and companies that innovate using digital currencies.”
The expected date for submission of the report to the Senate is said to be August 10th. Many Bitcoin enthusiasts are hoping that this regulation will help digital innovators across Australia improve their relationship with the government, while also helping their businesses grow.
If the regulation passes, then Australia will join the ranks of the few countries that consider Bitcoin as currency like the UK, which decided last year to treat Bitcoin as currency and exempted it from Value Added Tax.