Hmmm -- is this the end of BTC in AUS? !! Furious !!

[Razick]

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



<br /> <br />Posted From bitcointalk.org Android App http://

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.

[desired_username]

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

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

[RodeoX]

you can't stop BTC.

+1
Honey badgers don't do law.

[Sunderland]

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 "

[gtraah]

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.

[ArticMine]

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

[gtraah]

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%

[bornil267645]

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

[Dabs]

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?

[seriouscoin]

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.

[aztecminer]

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.

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.

[ArticMine]

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%

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:

First the disclaimer: I am not a lawyer

The question here is whether Bitcoin is subject to the Good and Services Tax (GST) in Canada. The GST is the Canadian version of a value added tax.  The relevant legislation is the Excise Tax Act http://laws-lois.justice.gc.ca/eng/acts/E-15/page-94.html#h-71. It may come down to whether Bitocin is considered "money" which is defined in the act as follows:

“money”
« argent »

“money” includes any currency, cheque, promissory note, letter of credit, draft, traveller’s cheque, bill of exchange, postal note, money order, postal remittance and other similar instrument, whether Canadian or foreign, but does not include currency the fair market value of which exceeds its stated value as legal tender in the country of issuance or currency that is supplied or held for its numismatic value;

There is probably a good case here under "and other similar instrument" for the position that Bitcoin is "money" and therefore not subject to the GST, given that its purpose is its use a medium of exchange in trade.

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

I have tried to sort out what applies regarding Bitcoin and VAT in Sweden and since some of the rules regarding VAT are harmonized within EU I thought that I'd share this in order to get some feedback from other EU citizens. These are my conclusions (I'm not an expert in this field so feel free to point out any errors or terms that I use incorrectly):

 * Finansinspektionen ("Financial Services Authority"?) in Sweden tell me that they do not consider Bitcoin a currency.
 * The Swedish Tax Agency tell me that I should treat Bitcoin as an "electronic service".

Everything that is delivered electronically is considered a "service" instead of a "commodity", there are a few differences in taxation but I don't think that's what's important here. What's important is that since Bitcoin is not considered a currency a purchase with bitcoins will be considered barter. In barter, one should look each transaction separately so that if e.g. a customer (private individual) buys a table from a company and pays with bitcoins these 2 transactions should be considered:

 1. The customer bought a table from the company
 2. The company bought some bitcoins from the customer

I the first transaction VAT is added by the company and recorded as output VAT. In the second transaction there is no VAT since the purchase is from a private individual. Later when the company wants to get rid of the bitcoins this will be considered a sale of bitcoins (regardless of whether they are exchanged for some currency or if something is bought using them) and then VAT should be added to the sale and recorded as output VAT.

From what I can understand this is a bit problematic. It will be hard for the company to exchange the bitcoins since they must add VAT (in Sweden this is 25%) to the "sale". No private individual will buy at that price since they can buy from eachother with no VAT. Some other company could possibly buy them since they can deduct the VAT but at some point some company will have to return the bitcoins to an individual.

Have other people in the EU reached similar conclusions? If my conclusions are correct it is a pretty big obstacle in getting merchants to start accepting Bitcoin.

For Swedish readers, I have started a similar topic in Swedish at bitcoin.se.

There is a very critical flaw in this argument especially in the case of Sweden. The "private individual" is no longer a consumer but is in fact a business that is selling Bitcoin and has to register for VAT. Sweden has in fact one of the lowest minimum thresholds for VAT/GST registration in the OECD http://www.oecd.org/dataoecd/12/12/34674438.xls at 30000 SEK or approx 840 BTC at current rates!  In a Bitcoin only economy every transaction would have equally compensating input and output VAT credits and equal amounts of VAT charged by each party effectively negating the VAT.

The bottom line if that if the tax authorities choose to treat Bitcoin as a "digital service" they have essentially created a huge loophole for VAT avoidance simply by registering for VAT and then using Bitcoin for every transaction.

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/ 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.

[gtraah]

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..

[johnyj]

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

[seriouscoin]

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.

[101111]

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?

[Ozziecoin]

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.

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/

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

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.

[gtraah]

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

[Ozziecoin]

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:

17. Under subsection 118-10(3) of the ITAA 1997, a capital gain made from a personal use asset (a CGT asset used or kept mainly for personal use or enjoyment)13 is disregarded if the first element of the cost base is $10,000 or less.14 In addition, any capital loss made from a personal use asset is disregarded under subsection 108-20(1) of the ITAA 1997.

18. This Draft Tax Determination is not intended to define the circumstances in which Bitcoin would be a personal use asset. Bitcoin is not kept or used for personal enjoyment. Bitcoin that is kept or used mainly for the purpose of profit-making or investment, or to facilitate purchases or sales in the course of carrying on business is not used or kept mainly for personal use. Bitcoin that is kept or used mainly to make purchases of items for personal use or consumption ordinarily will be kept or used mainly for personal use. Other categories of use conceivably could exist; taxpayers in these cases should seek private rulings.

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.

[jubalix]

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.