The Government will make it easier for new innovative digital currency businesses to operate in Australia. As part of the 2017-18 Budget, the Government announced it would remove the double taxation of digital currency from 1 July 2017. The Budget announcement reaffirmed the March 2016 Government’s commitment to address the ‘double taxation’ of digital currency in the GST law in the Treasurer’s Backing Australian FinTech statement.
From 1 July 2017, digital currency will be treated just like money for GST purposes. Currently, consumers who use digital currencies can effectively bear GST twice: once on the purchase of the digital currency and once again on its use in exchange for other goods and services subject to the GST.
The Government has released exposure draft legislation and explanatory material for amendments to give effect to the Budget announcement. The draft legislation would have a retrospective start date of 1 July 2017.
Public consultation on the exposure draft legislation and explanatory material will run for four weeks, closing on Wednesday 26 July 2017. The purpose of public consultation is to seek stakeholder views on the exposure draft legislation and explanatory material.
The Government has worked with industry to identify the best option to reform GST law to remove the double taxation. In May 2016 the Government released a discussion paper entitled ‘GST treatment of digital currency’ that outlined potential approaches to remove the double taxation of digital currency.