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Bitcoin: Australia's tax office announces it will not treat popular digital currency as money

Bitcoin: Australia's tax office announces it will not treat popular digital currency as money

The Australian Taxation Office (ATO) will not treat Bitcoin transactions as money, fuelling fears the industry will be driven offshore or underground.

The ATO has released its anticipated guidance on crypto-currencies, saying Bitcoin or other digital currency payments will be taxed like a non-cash barter transaction.

The announcement dashes the hopes of Australia's digital currency industry and raises fears of the end of Bitcoin's growth in Australia, as businesses move offshore to countries with more favourable laws.

Many local businesses which accept Bitcoin as payment for goods or services had been hoping the internet currency would be treated under tax law as the same as money or foreign exchange.

Doing so makes record keeping and taxation requirements significantly easier.

It also avoids double taxation as, under the ATO's view, businesses buying digital coins will have to pay GST on the Bitcoin and on the services they offer.

Only about 1000 businesses in Australia currently accept Bitcoin as payment. It is transferred via the internet, and, as such, countries have limited control in how it is moved around the world.

"There's been a lot of public interest in crypto-currencies," said Michael Hardy, a senior assistant commissioner at the Australian Taxation Office.

"A few taxpayers have asked us for private rulings along the way.

"We've had enough persistent queries from the public that we thought we should put out some general advice and guidance for the public."

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