The Australian Tax Office (ATO) has delayed a keenly awaited ruling on the digital currency Bitcoin, leaving the tax status for businesses which accept Bitcoin in limbo.
The ATO has been grappling with the question of whether to classify Bitcoin as money or property for years.
Many in Australia’s Bitcoin industry had been hoping the ATO would release its taxation guidance note in time for the end of the financial year.
However that looks unlikely, with the ATO asking Australia’s Solicitor-General Justin Gleeson for further advice.
It means businesses in Australia which accept Bitcoin have to keep trading without knowing what tax they may be liable for in the future, and may face large backdated tax bills for digital currency transactions.
A spokesman for the ATO says the department has received “numerous” submissions from the Australian public about the taxation treatment of digital currencies.
He says the ATO needed to make sure its ruling was within the boundaries of Australian law.
“To ensure our advice to the community is comprehensive and robust we have sought further advice from external legal counsel,” the spokesman said.
“We have also received representations from industry bodies seeking to provide us with further information.”
The Bitcoin Association of Australia is disappointed with the lack of immediate guidance, but says it is happy the Solicitor-General is looking into the matter.
“As digital currencies such as Bitcoin are now a permanent part of our financial landscape, it is important for Australian regulators and legislators to foster and nurture growth,” the association’s president Jason Williams said.
“The ATO’s position will deliver one of the first precedents in the Australian legal and regulatory landscape and will be an influential benchmark.
“As such, it is important not to rush decisions.”
Earlier this month, the ABC revealed the ATO has kept a wide-ranging watching brief on digital currency news and movements domestically and internationally.
Freedom of Information (FOI) documents showed the ATO was growing increasingly concerned people may be using Bitcoin or other internet currencies to avoid paying tax.
When the guidance note is release, it will reveal how the tax office will treat Bitcoin transactions.
It will either treat Bitcoin as money – similar to how it treats foreign exchange currencies – or as goods.
If it is not treated as money, tax accountants say it will require significantly more complex accounting methods and attract different and more tax.