On 21 March 2016, the Government announced that it would address the ‘double taxation’ of digital currencies under the GST, including working with the industry on developing options to reform the GST law, as part of the Treasurer’s Backing Australian FinTech statement.
Financial technology – or FinTech – brings technological innovation into the financial system, improving efficiency and service delivery and radically changing how businesses and consumers interact. The Government is committed to harnessing opportunities to help Australian FinTech develop and to encourage exports of innovative financial services across the Asia-Pacific region.
For digital currency, the current treatment under the GST means that consumers are ‘double taxed’ when using digital currency to purchase anything already subject to GST. The Government recognises that this treatment may be preventing the use of digital currencies and hindering their further development.
The Government has released a discussion paper entitled ‘GST treatment of digital currency’. This paper provides background and questions for consultation on the potential approaches available to identify digital currencies in the GST law and change their GST treatment to remove ‘double taxation’.