The Australian Taxation Office is set to consult with key figures in the growing Bitcoin industry for the first time as it prepares guidelines for how to recognise and tax it and other virtual currencies.
ATO officials will meet several Australian-based Bitcoin-related companies in Sydney on Tuesday, as well as accounting and tax experts, ahead of releasing a draft discussion paper next week. It is expected to make public the taxation guidelines on June 30.
According to a consultation invitation, obtained by The Australian Financial Review, ATO officials are seeking feedback on how to treat transactions, investments and income, as well as Bitcoin exchanges and “mining”; the complex mathematical algorithms that must be solved by computers to make more Bitcoins available on the open market.
An ATO spokesman did not respond to questions at time of publication.
While the invitation appears to cover general virtual or “crypto” currencies, it is not known whether those representing other types of online money have been invited. An alternative to Bitcoin, Dogecoin, was developed by a pair of Australians but they are understood not to be attending.
Bitcoin proponents are pushing for regulation which legitimises the virtual currency as a form of money, but also want leniency to remove barriers to investment, and over onerous regulations, such as the fact that GST is levied twice on each Bitcoin transaction.
Regulators on sidelines
DLA Piper partner Matthew Cridland said in a paper to clients last month that, under Australian GST laws, Bitcoin would not be classified as money as it is not backed by a government.
Globally, regulators have struggled with the proposition of harnessing the currency.
Initially, Britain said it would impose VAT tax on Bitcoins, only to remove the imposition last month.
The US tax authority has classified Bitcoin as property, a move the industry says is an unfair characterisation.
“It’s not outright a commodity or currency; it’s something new altogether, so how they approach this new vehicle, which hasn’t been seen before, it takes a bit of consideration as to whether any existing legislation outright applies to it,” said Asher Tan, founder of Sydney-based company CoinJar. “Regulation is important but it has to be considered; it shouldn’t be too hasty but all regulators should try Bitcoin before they regulate it.”
Jason Williams, founder of BitPOS and president of the Bitcoin Australia foundation, said the currency had matured to the point of requiring legitimacy in order to propel use but protect consumers. For more information about how the ATO will treat Bitcoin transactions, visit the Bitcoin Conference site.
“We’re in a position where we believe the crypto-currency has grown up and it’s professionals getting into the market now; the time of fly-by-nighters has gone.”