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Australia has been actively involved in the bitcoin community for a while now. Even though the bitcoin businesses are still catching up in the region, there are many start-ups involved in creating amazing products. Even the government has been supportive of the new digital currency revolution. The country has now taken another step forward by paving way bitcoin to be considered as a currency.
A recent inquiry commissioned by the government of Australia to categorize bitcoin has stated that the digital currency has to be treated like a national or a foreign currency in the Australian soil. The inquiry was set up to determine the application of taxation regulations. The country’s Senate Economics References Committee conducted a review of bitcoin and determined that it should be considered as any other currency when it comes to application of Goods and Service Tax (GST).
The decision of Senate Economics References Committee conflicts with Australian Taxation Office’s earlier ruling in 2014 which had declared digital currencies to be commodities for which GST regulations are applicable along with additional taxes.
The ATO’s guidelines created an uproar among the Australian bitcoin community and bitcoin startup ecosystem. Many Australian startups had already started contemplating about their next moves, which included them shifting their base of operations away from Australia.
The Committee’s had received submissions from various bitcoin businesses including Ripple Labs mentioning the effects lack of uniformity in global bitcoin regulations can have on fintech sector. The ATOs stand on bitcoin was acting as a barrier for bitcoin based businesses to scale up. Especially with digital currency and the technology behind it gaining popularity among individual and institutional users across the world, it is essential to create a favorable environment that fosters innovation in digital currency sector.
Few months ago, Switzerland became the first country to do away with VAT for bitcoin transactions. Even United Kingdom has stated that it will be treating bitcoin as a currency. Where as in United States, bitcoin is considered both as a commodity and currency, creating a lot of confusion among people. The IRS has categorized bitcoin as a commodity and not currency to make bitcoin holdings and gains taxable.