Agreed. Although it is a self-assessed tax, so people will need to form their own view (or go for a ruling) before an audit occurs.

I expect the ATO won't have a problem with people paying GST when they spend or trade Bitcoins!

If the ATO does take the view that GST applies, then a legislative change would be required to change that. The change would involve the Government, on advice from Treasury (not the ATO).

No - GST doesn't apply to precious metals.  But there is a specific exemption and "precious metals" are defined in the GST legislation to mean (in summary) "gold, silver, platimum or any other substance listed in the GST Regulations".  So that won't cover Bitcoins either.

The legislation could be changed to specifically cover Bitcoins (probably as money, but possibly as a precious metal).  But that would require Government involvement.

The issue is this:

- Notwithstanding the name, GST is not limited to "goods and services".  It can apply to a "supply" of things that aren't goods or services, including intellectual property rights, land, etc.

- Anyone that has a Bitcoin in a wallet will tell you that they own something of value (personal property), although a Bitcoin is completely intangible / digital.  A Bitcoin gives you the right to acquire something (or to convert to mainstream currency) in exchange for the Bitcoin.

- The GST legislation deals with payments of "money" by saying that this is not a "supply".  The GST legislation also provides that GST doesn't apply to the foreign currency conversions.

- The problem is that the definition of "money" in the GST legislation may not currently extend to Bitcoins, as Bitcoins are not issued by a country.  The forex rules may not apply for the same reason.

This is not to say that Bitcoins shouldn't be treated in the same way as money / foregin current - just that a Bitcoin may not qualify on the current definitions.

The video raises this at around 1.06 mins onwards.

It may only be an issue for GST registered business though - and for trades done in Australia.  People that aren't registered , or who are trading cross border, probably don't need to worry about it. 

An old thread, but this is on point >> http://www.youtube.com/watch?v=TQ4UT5n29II