Investors and businesses that trade using the digital currency Bitcoin are on notice as the Australian Taxation Office plans to be among the first to crackdown on undisclosed capital gains and GST at tax time this year.
In a statement provided to the Financial Review’s Sunday program on Channel 9, ATO senior assistant commissioner Michael Hardy said the tax office has been monitoring the growth in the numbers of Bitcoins along with other alternative payment systems and will provide further advice to taxpayers before June 30.
“The ATO is working on a holistic understanding of the taxation treatment of Bitcoin to be in a position to provide certainty for the Australian community,” he said.
The ATO’s US counterpart, the IRS is also looking to release similar guidelines this year.
It comes as the Australian Securities Investments Commission has also confirmed to the Financial Review that Bitcoin is on its regulatory radar.
“Electronic currencies or crypto currencies – which include Bitcoins – are a developing area globally. Like other regulatory bodies around the world, ASIC is considering whether and how current legislation (such as the Corporations Act) might apply to these arrangements,” said ASIC spokesperson Hilarie Dunn.
Fueling its popularity, has been its profit growth and decentralised status. It also appeals because it allows traders to buy and sell goods, such as coffee, shoes and even property, in real time and without the transaction costs that would otherwise apply at a bank or by using a credit card or another rival electronic form of payment, such as via PayPal.
But Bitcoin has also attracted negative headlines, most recently with the owners of a Bitcoin company in the US being charged with fraud and money laundering.
Complicating matters is the absence of government, banker or regulator backing Bitcoin, making it arguably less transparent and perceived as a riskier investment than normal currencies.
Alex Malley chief executive of accounting body CPA Australia has welcomed the news, but said the difficulty facing the ATO is that transactions using Bitcoin are hard to trace.
by Bianca Hartge-Hazelman