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Bitcoin And The ATO's View

Alan Tsen
September 03, 2014

Bitcoin And The ATO's View

A presentation made at the 'Bitcoin Melbourne' meet -up on 03/09/2014.

This presentation was a brief overview of the bitcoin rulings issued by the Australian Tax Office.

Please note, this slide deck is not legal or tax advice and should not be used as such. Please consult you tax accountant or lawyer for advice on Bitcoin that is appropriate to your circumstances.

All references from my talk can be found at http://alantsen.com/presentation-references/

Alan Tsen

September 03, 2014

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  1. Disclaimer This presentation does not constitute legal, accounting or tax

    advice. Any tax-related opinions in any part of this presentation are not tax advice, and were not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties or for promoting, marketing, or recommending to another party any transaction or matter addressed herein. Everyone should seek the advice of a competent, independent tax professional regarding their particular circumstances. I make no claims, promises, or warranties about the accuracy of the information provided in this presentation. Tax advice cannot be provided on a general basis, and must be specifically tailored for each individual by their particular representative. Everything included in this presentation is the author’s opinion and not a concrete fact. Alan Tsen Bitcoin & The ATO’s View
  2. Bitcoin & The ATO’s View What I’ll Be talking about

    ‣ general comments ‣ Overview of rulings ‣ impact on Individuals ‣ impact on Merchants ‣ impact on Exchanges (buyer/sellers) ‣ overall impact? Alan Tsen
  3. Important to Note ‣ Guidance paper is very high level.

    rulings is where you want to look. ‣ This is the ato’s view - not law. ‣ circumstances vary so rulings may apply differently to you. ‣ you can always apply to the ato for a ruling if you need an ‘answer’. Bitcoin & The ATO’s View Alan Tsen
  4. overview income tax ‣ Legal form property. Therefore CGT asset.

    ‣ personal use asset exemption applies (for cost base of bitcoins $10,000 or less) ‣ Miners - potentially revenue in nature. therefore assessable/ deductible but maybe limited by non-commercial loss provisions Bitcoin & The ATO’s View Alan Tsen
  5. overview income tax ‣ sales using bitcoin will be treated

    as a barter transaction. therefore, will form ordinary income of the business. ‣ sales need to be recorded in aud (@ fair market value). ‣ not a ‘foreign currency’ for div 775 purposes. Bitcoin & The ATO’s View Alan Tsen
  6. overview Goods & Services Tax (GST) ‣ a ‘supply’ of

    bitcoin is a taxable supply. meaning GST will likely apply. ‣ It is not ‘money’ for GST purposes. ‣ it is not input taxed as a ‘financial supply’. ‣ an exchange of bitcoin for goods or services will be treated as a barter transaction - GST will likely apply. Bitcoin & The ATO’s View Alan Tsen
  7. individuals ‣ CGT asset. therefore cGT applies on disposal of

    bitcoins. ‣ however, personal use asset exemption applies - provided cost base is $10,000 or less. ‣ will potentially be paying 10% more for ‘Australian’ sourced bitcoins. ‣ FBT may be an issue for some. Bitcoin & The ATO’s View Alan Tsen
  8. Merchants ‣ sales of goods and services for bitcoin will

    likely attract GST - nothing new. ‣ however, double gst could apply on the transaction. once on sale and a second time on exchange for fiat. ‣ barter transaction - will need to keep records of ‘value’ of the bitcoins. Bitcoin & The ATO’s View Alan Tsen
  9. exchanges (buyers/sellers of bitcoins) ‣ GST will likely apply to

    supply of bitcoins. ‣ availability of GST credit on acquisition of bitcoins may be limited. ‣ Structuring Opportunities? ‣ open questions: GST import and export rules and international transactions for income tax. Bitcoin & The ATO’s View Alan Tsen
  10. Overall impact? ‣ consumer win with personal use asset exemption

    = stimulates bitcoin use? ‣ Transactional taxes are a global issue = same issues in other jurisdictions. ‣ bitcoin start-ups invert into different jurisdictions = no bitcoin eco-system in Australia? Bitcoin & The ATO’s View Alan Tsen