Last updated on August 30th, 2014 at 07:49 pm
Countries around the world seem to each have their own idea of how they plan to classify digital currencies such as Bitcoin – should it be considered a form of currency or personal property? Or perhaps is should be outright banned as is the case in Ecuador and potentially Russia.
Few federal governments seem even remotely close to classifying bitcoin as a legitimate legal currency, however there are those who are positioning themselves to remain open to the possibility of it happening in the future.
Australian tax commissioner Chris Jordan recently remarked that while bitcoins are not considered money under their current Tax Act, if transactions continue to increase, future legislation may be necessary to change its legal definition.
Jordan made the comments Wednesday in a parliamentary inquiry, saying that he was aware of industry concerns regarding Bitcoin not being treated as money, but he said there is no choice under the current Tax Act.
“Proponents want it to be treated like money,” Jordan told the inquiry. “There’s a definition in the Tax Act of money. It’s got to be the legal tender of a country. We can’t say it’s money. If this grows more and more maybe the definition needs to change.”
For this change to be made, amendments to the Tax Act would need to be made by the Australian federal parliament.
Jordan’s comments come after last week’s announcement that the Australian Taxation Office decided to define Bitcoin as an intangible asset under their current taxation system, rather than money or even a foreign currency – despite strong outcry from the industry asking for it to be categorized as money.
Such a ruling means that it will be subject to the goods and services tax.
Michael Hardy, a senior assistant commissioner in the tax office, said, “The Australian Tax Office has consulted extensively with bitcoin experts, businesses, industry bodies and other external stakeholders to develop this guidance and explain the obligations of bitcoin users.”
“People involved in buying or selling bitcoin or other cryptocurrencies – whether individuals or businesses – are encourage to read our guidance. If their circumstance are not covered by the guidance, they can seek a private rule by contacting us.”
It seems as if it’s only a matter of time before Bitcoin gains global widespread adoption as legal tender. Considering how new this technology actually is, governments and jurisdictions for the most part, have remained rather impartial on the matter, with very few issuing outright bans.
And even the few bans that have been issued, which will never be truly effective against a decentralized technology, are likely reactionary attempts to protect their current paradigm which will inevitably be reversed or superseded once bitcoin reaches critical mass adoption with the people demanding the right to use such technology.
Nonetheless, it’s refreshing to hear government officials such as Jordan voice his opinion that if demand reaches a certain point, they will have no choice but to classify Bitcoin as money.