Bitcoin Forum

http://www.smh.com.au/technology/technology-news/australian-tax-office-decides-bitcoins-are-assets-not-currency-20140820-1063gq.html (http://www.smh.com.au/technology/technology-news/australian-tax-office-decides-bitcoins-are-assets-not-currency-20140820-1063gq.html)


I am absolutely furious about this and have a VERY bad feeling, I was actually in BTC for long term even if it went down to $40 per BTC, but this has got me really pissed and borderline edgy thinking if I should even bother anymore.


http://www.theaustralian.com.au/business/latest/bitcoin-to-cop-gst-ato/story-e6frg90f-1227030976018?nk=fa025c20b23bd9e73e725988d137e0f2 (http://www.theaustralian.com.au/business/latest/bitcoin-to-cop-gst-ato/story-e6frg90f-1227030976018?nk=fa025c20b23bd9e73e725988d137e0f2)

I absolutely love this shit, and it really has got me down even more then if the price went to $300...

One thing I am keen to see is what  the owner of Coinjar said in the last link

"Melbourne-based Bitcoin company CoinJar’s co-founder Asher Tan said that while his company already has international expansion plans on the cards, the ATO’s guideline paper certainly gives businesses like CoinJar plenty to think about.

“But there are ways to work around the regime,” he said."


Guys what do you think? what would you do seriously? I mean taxed twice is an absolute PUNISH, who will do that just to buy anything with Bitcoin, no one will EVER buy bitcoin in AUS, and there goes yet another country on the BTC list!!

you can't stop BTC.

Bitcoin still runs perfectly fine no matter how much regulations (or lack thereof). No amount what laws are passed, it doesn't change bitcoin fundamentals or the protocol. I will admit that these kind of things are a bit of an inconvenience, but it can't completely kill btc, even if every country passes similar laws. Currently, the IRS in the US taxes bitcoin in the same way, except we get it even worst where it's considered as a currency in a different branch of the government.

In the US, it's effectively being taxes like property, but regulated as a currency.

But I don't want to pay more than 15% on top of btc price. yes I know they can't stop it but they can destroy it's buying power and render it useless to use.. ...

But do the US have to pay tax on each purchase of bitcoin? like from aud to btc we may have to pay tax .. like we pay tax on any good we buy GST it's called
http://www.coindesk.com/australian-bitcoin-industry-unhappy-tax-office-issues-guidelines/
above link , last 2 paragraphs before the 1st sub-heading have my hopes up

So you basically have to use exchanges outside AUS for not being charged +15%.

LOL this is not a problem. You can use exchange outside of AU

This tax ruling is useless. Sooner or later, they will change it.


Actually this seems better for avg person than in US, no capital gain tax for <$10,000 ?

Or you have to use something like localbitcoins.
Buy them from someone else.
Although this method also introduces a premium

Nope, according to the guidance ..... the GST only apply to business tx. So localbitcoiners wont have to worry about double tax (otherwise, it would be impossible to enforce)


This guidance is so amusing, whoever came up with this dumbest idea should be shot.

Well, you can't blame people for being dumb.
Shooting them is a little bit over the top.
You'd better laugh at them, and take advantage of their stupidity.

It seems to me they are clumsily trying to force a square peg into a round hole with potentially ugly consequences.

rules and laws can change in the future - in both ways.

wait a minute, I might have read things wrong and my feelings are changing to , Thank goodness!


Let me get this straight, as per comments on reddit and all over the place.

I am a normal average Joe, I do not run a business and I only want to purchase Bitcoin to buy some products from NewEgg ....

I visit Coinjar.com, Cointree.com or igot.com as an Example, I then log into my account and say I want to purchase 2 x BTC for personal use.

Do these Exchanges Charge me 10% GST on these bitcoin that I buy of them? (Remember I am only a person of the street wanting to buy some BTC so I can purchase some online goods for Under $10,000) <<< This is the golden make or break question.

Yes, as it stands you would pay 10% GST. If you buy 1 bitcoin at an exchange rate of AUD$500, your total price would be AUD$550.

I'm not concerned about these regulations at all. As countries start coming out with more and more ridiculous tax and AML/KYC regulations, I just add them to my list of countries to avoid. There will always be friendly jurisdictions where they still care about taking in business as opposed to bending over backwards for bureaucrats.

Australia no good anymore? No problem, just move your balances over to Hong Kong. Hong Kong goes down? Time to deal with Panamanian exchanges.  ;D

Well then that removes ALL the normal consumers out of Bitcoin, in all of Australia if thats how it stands... This Guys OzzyCoin on reddit seems like he says no, only if you are a business buying from an exchange you are to pay GST on it, not if your buying it for personal use and non-business, Exchanges will have to create 2 Buying options, 1 = Business Buys 2 = Individual Personal buys

If he is correct, then the ruling is actually pretty good

http://www.reddit.com/r/Bitcoin/comments/2e1wpm/ato_tax_ruling_australia/ (http://www.reddit.com/r/Bitcoin/comments/2e1wpm/ato_tax_ruling_australia/)

Check ozzycoin comments


Again - If normal people have to pay 10% GST just to get into bitcoin ROFL, there is no way in HELL ANYONE would be stupid enough to buy bitcoin, at the moment it is already a hassle to get Bitcoin, and ontop of the hassle charge 10% Ontop and then again when you purchase a product from australia ROFLLLLLLLLLLLLLLLLLLLLLLLL Are these tax idiots dreamin or what? I cannot beleive that is the case for normal users, they basically just spat in the face of everyone in australia and said "YEH!! you want to buy BITCOIN?? OK DO IT , But you  going to GIVE US 10% Twice if you do , So suck a big fat one HA HA HA

Here's Ron Tucker's interpretation, which agrees with mine:

"The way they've chosen to interpret how it should be applied is unfortunately very stifling for emerging Australian digital currency businesses and the industry as a whole," said Ron Tucker, the chair of the Australian Digital Currency Commerce Association and a partner at BitTrade, a digital currency trading service.

"It's essentially a double GST effect. It is adding 10 per cent tax on the entire supply of the Bitcoin.

"So if the Bitcoin is worth $500 today, you'll be paying 10 per cent tax on that, as well as the GST on the service or commission fees that the Bitcoin companies may charge."

Mr Tucker said the ATO's view on Bitcoin will send business either offshore or underground.

"I've already heard from a number of our members that they are in the process of – or already have or will be – setting up shop offshore," he said.

source: http://www.abc.net.au/news/2014-08-20/bitcoin-will-not-be-taxed-as-money-ato-says/5683974

This maybe the begining of a war for our freedom... can we become a free people once again?  Only time will tell.

Yes and this is where I want to find out more.

When I first read what Ron tucker said that this is what I gathered then when I read the actual ATO draft directly from the ATO it is not said that way which leads me to beleive there is miss interpretation here, he possibly meant it for businesses, But I want to get more clarification on this.

In the US, you don't pay taxes to invest. You pay taxes on capital gains (profits) when you sell and can deduct capital losses.

I cannot recall any point in history when people were free. Maybe in the very early stages when the ancestors of our species did not organize in groups.

When a society collapses, after a brief period of struggle the most influential/strongest authority grabs power and exploits everyone to their own advantage.
I'm hopeful that technologies like the internet, bitcoin, anonymity networks and free file/information sharing can help breaking this vicious cycle.

Recent developments are very concerning though, especially that the majority of the population is relying on governments.

"The illusion of freedom will continue as long as it's profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theater.” - Frank Zappa

+1
Honey badgers don't do law.

the funny things is some gov hate btc but they loved to collect money from btc tax.
or do we have to call " LegaL MoB "

Ok here is something I found which is unclear, where is the example of David who is Not-registered for GST decides to purchase Bitcoin from Liams exchange, Does not state that here , smart asses, totally missed that example out. Or may that same example can be seen in another one below but in different context which I couldnt see. This is where people get confused and think that only a BUsiness buying BTC needs to pay GST and if that business uses it in a non-business manner they can claim all that GST back.. Is that right?

Ruling

5. A transfer of bitcoin is a 'supply' for GST purposes.1 The exclusion from the definition of supply for supplies of money2 does not apply to bitcoin because bitcoin is not 'money' for the purposes of the GST Act.3

6. The supply of bitcoin is not a 'financial supply' under section 40-5. Further, it is not an input taxed supply under paragraph 9-30(2)(b).

7. A supply of bitcoin is a taxable supply under section 9-5 if the other requirements in section 9-5 are met and the supply of bitcoin is not GST-free under Division 38 (for example, as a supply to a non-resident for use outside of Australia).4 A supply of bitcoin in exchange for goods or services will be treated as a barter transaction.

Example 1: bitcoin exchange transactions

8. Liam carries on a business buying and selling bitcoin (BTC) as an exchange service online in Australia charging a 1% commission on the published exchange rate. Liam is registered for GST.

9. David, who is not registered for GST, uses Liam's online service to exchange 10 BTC to Australian dollars. The exchange rate at the time of the transaction is 1BTC = AUD662. The commission is $66.20. David receives AUD$6,553.80 for his 10 BTC.

10. The following day Karin, who is registered for GST, wishes to purchase 10 BTC from Liam's online service for use in acquiring an asset for her business. The exchange rate is 1BTC = AUD662. Karin acquires the 10 BTC for AUD$6,686.20 plus GST. The GST inclusive amount of AUD$7,354.40 is calculated as follows: 10 BTC x AUD$662, plus AUD$66.20 commission, plus AUD$668.62 GST.

11. Liam records this exchange transaction with Karin and includes the amount in his business activity statement. If Karin's acquisition is wholly for a creditable purpose, Karin may claim input tax credits for the GST she paid on the acquisition of the bitcoin. When Karin later acquires an asset in exchange for bitcoin, she will record the supply of bitcoin as a taxable supply and an equivalent credit may be claimed in respect of her asset acquisition.

Example 2: bitcoin provided in exchange for goods or services

12. Paul owns a computer shop and is registered for GST. He sells a server for a GST-inclusive price of $7,700 to Ross Co, a building company that is registered for GST. Paul agrees to accept bitcoin from Ross Co in exchange for the server.

13. When Paul lodges his business activity statement, he includes $7,700 for the taxable supply of the server to Ross Co and claims credits of $700 for the acquisition of the bitcoin. When Ross Co lodges its business activity statement, it includes $7,700 for the GST inclusive market value of the bitcoin, and claims credits of $700 for the acquisition of the server.

Example 3: merchant using an intermediary to accept bitcoin in exchange for goods or services

14. Following on from Example 2 above, Paul has an agreement with an intermediary acting as his agent to accept bitcoin in exchange for goods and services. When customers provide bitcoin to the intermediary in exchange for goods and services, Paul pays commission to the intermediary equal to 1% of the price. The intermediary agrees to deposit Australian currency (immediately or within one day) into Paul's nominated bank account. There is no agreement between the customer and the intermediary.

15. Two transactions occur here. First, the customer supplies bitcoin in exchange for the supply of goods and services from Paul as a barter transaction. The GST consequences of this are explained in Example 2. Second, Paul supplies bitcoin to the intermediary (through the transfer of bitcoin from the customer) for Australian currency which is treated as a taxable supply by Paul on which GST is payable. The intermediary provides Paul with taxable services for which the commission is consideration and the intermediary may claim credits for the acquisition of the bitcoin.

No it is not the end of XBT in AUS, but XBT and other crypto-currencies may have been turned into the perfect instrument to avoid and / or evade the GST is Australia. My take is that the Australian Tax Office officials are either extremely naive and do not understand how the GST actually works or what is more likely the case have their hands tied by a very narrow definition of money written into existing legislation. GST/VAT work precisely because barter transactions are very rare and they do not apply to the medium of exchange itself otherwise known as money.

What happens now when a business accepts XBT as payment for goods or services subject to the GST. They have to pay GST on the XBT, but to whom? To the seller of the XBT, formally a "consumer" and now a new GST registrant. The net result is that in this transaction no additional GST is collected since the GST on the XBT offsets the GST on the goods and services. The business now has an GST input credit which they can use to offset the GST they collect on AUD sales or even get a credit back from the government if they "export" the XBT out of Australia. Now what happens to our new GST registrant formally a consumer. Well since theoretically they are now responsible to remit the collected GST on the XBT to the Australian Tax Office, but wait they are now in the business of selling XBT! So they have expenses subject to GST they can claim (legal avoidance) and if they obtain XBT without paying GST (try collecting GST when XBT "crosses the border") tremendous opportunities for evasion. The net result of this will be the rise in GST registrations increasing GST collection costs and a reduction in actual GST collected. Initially it will be a trickle but once Aussies figure out how XBT and other crypto-currencies can be used to avoid and evade the GST, by turning consumers into GST registered businesses, it will become a flood.

Sooner or later the Australian government will come to its senses and follow the lead of the United Kingdom on this. G'day

I cant wait till people start fucking them up, RARRRGHHHHH CNTS!!!!!


Bro...

Have a read of my post above yours, and all the examples they put forward, this is from the ATO.

Does this mean that a normal NON-business Non GST registered person.. wanting to buy a Bitcoin from an exchange which are GST registered, need to actually pay GST on the bitcoin he purchases of the exchange?


You must read my post which was copied from the ATO to see what I mean.




PS -- -FoR those who don't know GST = 10%

Many country tried to stop this but Bitcoin can't be stopped 8) 8)

What happens to Australians who buy bitcoins from another country, like say, in Japan or the Philippines? (They're close enough you could talk to someone there, or you could take a quick vacation and actually do business with an exchange.)

What happens if no one else knows about the transaction? Or to rephrase that, how would the Australian government know if you bought bitcoins?

GST only applies to local tx. Just like when you buy digital product online(from shops outside of AU) = no GST.

What australia did was take away the 'currency' aspect of bitcoin turning it into an investment property.
if i wanted to buy from newegg using bitcoin to get the 10% promotion discount on their products would be pointless because australia government would get the 10%.
i read that australia was now using unemployed kids as forced labor sweat shop workers with the introduction of their new green army.
australia also sent their pm to china to tell china they are open for business in preparation for the usd reserve currency demise.

Yes the way I read this if a "consumer" namely non GST registered person were to purchase XBT from an exchange in Australia they would be subject to GST. This is the bait for the government. The trap in which the government falls is when the "consumer" sells XBT in Australia either for AUD or even better still in exchange for goods or services subject to GST. My point is that this consumer now has a very strong incentive to 1) Register for the GST or 2) purchase XBT outside of Australia or 3) both in order to avoid and / or evade the GST.

By the way I have been following this GST/VAT issue with XBT for well over two years. Here a post in early 2012 on the situation in Canada:



and my comments in 2012 regarding VAT in Sweden (Another government that apparently has swallowed the bait)


I made my case that trying to collect GST or VAT on XBT or other crypto-currencies will lead to rampant GST/VAT avoidance and / or evasion back in early 2012. Canada has not to this point fallen into this trap (I believe thanks to the broad definition of money see my quote above), the United Kingdom fell into the trap and escaped, Sweden is trying to push the whole of the EU into this trap http://www.coindesk.com/europe-inches-towards-decision-bitcoin-vat/ (http://www.coindesk.com/europe-inches-towards-decision-bitcoin-vat/) and Australia has swallowed the bait. The point is that GST/VAT are by design consumption taxes and trying to collect them on something that is not consumed simply does not work.

Guys,

Good News!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I spoke to one of my favorite Exchanges.... www.cointree.com

They said It will be business as usual the the MAJORITY of individuals, meaning ALL IS GOOD!!!!!!!!!!! :) They will release a notice soon.



I think there is a legal loophole around this, even Ash from Coinjar said that "there is away around this regime" to ABC News...



Either that, or they called ATO to get more clarification. who knows.... what they said to me eased my pain..

The other side of the coin: This opens the trading for everyone

If categorized as money, then buying and selling bitcoin will need some money transmitter license and follow many anti-money laundering and other laws for finance institutions. That will make normal people more difficult to buy bitcoin

If categorized as capital goods, if you buy and hold, you never pay tax

nailed it.

Stupid regulators,

Also looks like the guidance says for <$10000, there wont be capital gain tax.

I wonder if any non Australian businesses will setup offices in Australia to circumvent money transmitter rules in their own countries, just as multinationals now shift money around to avoid paying tax?

My fault. Looks like standard Aussie exchanges will have to charge 10% GST. Marketplaces like btcmarkets.net should still be fine. Cointree saying everything is ok, is news to me. Most likely, aussie exchanges will just offshore unless they find a loophole.

i think there is a loophole bro or they found out something we dont know.. i spoke with cointree and they said for me not to worry it will be business as usual for MOST.. before i got that reply i told them that if normal consumers have to pay 10% ontop of other fees they may as well give up and adoption will take a big step back in AUS; so this is when they replied "you dont have to worry it will business as usual for most"  all we can do now is hope boys n girls :D

By the way the $10k cost base CGT tax exemption on Btc is for personal use only. This implies you must actually spend the Btcs on goods and services down the track. If you buy Btcs, keep it and then sell it down the track - they could argue this was an investment purpose and the exemption might not apply.  But if you buy a lambo, then it appears you would be fine:


From here: http://law.ato.gov.au/atolaw/view.htm?DocID=DXT/TD2014D12/NAT/ATO/00001 '

Get a private tax ruling if in doubt.

Raises many questions:

1. If buying a bottle of wine and aging it for 10 years before consumption is okay - then can't I be "maturing" my Btcs before "consuming" them by buying goods and services?

2. Is buying Btcs for spending in retirement "consumption" or "investment"?

3. Is buying Btcs and then buying a house with it "consumption" or "investment"?

4. What if I sold my Btcs then bought a house with it? Is that "consumption" or "investment"?

5. Is there a one year deadline for spending Btcs that have been purchased?  I don't see that written anywhere in the personal use asset definition that consumption must happen within a one year period.

Edit: writing to the ATO for clarification now.

ok so at the BTC Barcamp earlier this year we had the benefit of a Tax Lawyer/?Barrister from one of the large law firms give a view as to tax. They guy was very professional and up their with the best.

If  I recall he was of the view that due to the defn of money the tax office would have to do the double taxation.

However as long as the BTC were purchased from and O/S source there would be no double taxation or even GST. So the work around is the Australian BTC sellers eg coinjar have to hold the BTC they sell on a computer/server outside of Australia. Given whay bitcoin is it is ideally suited to this as the bitcoin is given via the blockchain.

This was due to a High Court Case and tax on cigarettes if memory serves.

So that's the work around for that.

Bitcoin is perfect as assetclass and it does nothing bad. It only confirms regulators accepting it then more businesses will get involved because now it's clear how to do taxes.

If you have to pay tax on BTC earnings and you are mining BTC can you therefore claim the expense as a tax deduction?

It's in every country different. But profit from trading in most should be treated like trading in commodities.
Mining is more like an industry so your equipments are machines/inventory.

Yes, generally speaking, all expenses related to earning the income are deductible.

http://www.cryptocoinsnews.com/news/australia-bitcoin-tax-good-average-joe/2014/08/21 (http://www.cryptocoinsnews.com/news/australia-bitcoin-tax-good-average-joe/2014/08/21) possible good news... guys we should&nbsp; comment .. check the last paragraph on article.. ato will look to asjust things on the draft after listening to the btc community all we can do is hope. <br /> <br />and if a normal average joe has to pay gst when buying bitcoin under 10k that cleary doesnt make it good for average joe. lets comment like there is no tomorrow and it will be passed onto ato check link last paragraph for comment instructions... do not let this slide.. its either we fork the ato draft now or it will be too hard later.  

Legitimate business already comply with existing rules and regulation.

Making btc comply with the law is not really that difficult. I don't see how this will end btc usage in Australia.

Maybe this new development will actually increase usage in AUS. Especially if everyone is compliant and legal and all that.

I made a petition on the GST issue. Please share it around and sign!

http://www.change.org/p/treasury-of-the-australian-government-make-australia-a-bitcoin-friendly-country

Bitcoin is however you use it. It can be just another way to store value, like metals, or it can be used as actual currency. The more merchants, the more usage as currency it will have tho. Bitcoin is uncorruptible and no goverment can tell "what it is" or how you use it.