Australia promises to remove tax on Bitcoin, support FinTech innovation
Mon 21 Mar 2016
The Australian government announced today that Bitcoin and other digital currencies would no longer be subject to Goods and Services Tax (GST), and regulations would become more lenient to support startups and entrepreneurs in the country.
Treasurer Scott Morrison noted in a detailed policy statement today that various new law proposals would see GST removed on Bitcoin, restrictions and tax barriers eased for venture capital investors, and a stronger focus on crowdfunding and peer-to-peer lending.
Bitcoin has had a turbulent relationship with Australia up until now, with recurrent controversy over whether or not to tax the cryptocurrency. In the past, GST had been applied to Bitcoin which had forced the startup community to reconsider their future in the country. This restriction faced lots of criticism with digital currency experts arguing that the move would damage growth potential and innovation in Australia’s FinTech sector.
An excerpt from today’s policy release, titled Australia’s Fintech Priorities, reads:
‘The Government recognises that that the current treatment of digital currency under GST law means that consumers are ‘double taxed’ when using digital currency to buy anything already subject to GST.
‘The Government is committed to addressing the ‘double taxation’ of digital currencies and will work with the industry on legislative options to reform the law relating to GST as it is applied to digital currencies.’
To ensure innovation in the field, the government also announced that it would establish a ‘regulatory sandbox’ alongside the Australian Securities and Investments Commission (ASIC) to support startups.
The policy explained:
‘We need a regulatory environment that provides consumers with confidence while not unnecessarily restricting the opportunities for innovation.
‘A ‘regulatory sandbox’ has the potential to encourage and support the design and delivery of new financial products and services that benefit consumers and businesses. The industry believes that a ‘sandbox’ is a crucial component to assist Australia become a leading market for FinTech innovation in Asia.’
While the news about removing GST on Bitcoin and other FinTech proposals have been confirmed, specific details are yet to be agreed upon. It is expected that government officials will meet with industry experts over the coming months to look at reforms.