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18 Dec 14 4 Bitcoin Taxation Determinations and one GST Ruling issued

On 17 December 2014, the ATO issued the following 4 Taxation Determinations on Bitcoin:

  • TD 2014/25 Income tax: is bitcoin a 'foreign currency' for the purposes of Division 775 of the Income Tax Assessment Act 1997? (Previously issued as TD 2014/D11)
  • TD 2014/26 Income tax: is bitcoin a 'CGT asset' for the purposes of subsection 108-5(1) of the Income Tax Assessment Act 1997? (Previously issued as TD 2014/D12)
  • TD 2014/27 Income tax: is bitcoin trading stock for the purposes of subsection 70-10(1) of the Income Tax Assessment Act 1997? (Previously issued as TD 2014/D13)
  • TD 2014/28 Fringe benefits tax: is the provision of bitcoin by an employer to an employee in respect of their employment a property fringe benefit for the purposes of subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986? (Previously issued as TD 2014/D14)

The Commissioner has ruled as follows:

  • Bitcoin is not a 'foreign currency' for the purposes of Division 775 of ITAA 1997
  • Bitcoin is a 'CGT asset' for the purposes of s 108-5(1) of TAA 1997
  • Bitcoin, when held for the purpose of sale or exchange in the ordinary course of a business, is trading stock for the purposes of s 70-10(1) of ITAA 1997
  • The provision of bitcoin by an employer to an employee in respect of their employment is a property fringe benefit for the purposes of s 136(1) of the Fringe Benefits Tax Assessment Act 1986

 

On the same day, the ATO issued the following GST Ruling:

  • GSTR 2014/3 Goods and services tax: the GST implications of transactions involving bitcoin (Previously issued as GSTR 2014/D3)

In relation to GST, the Commissioner has ruled as follows:

  • A transfer of bitcoin from one entity to another is a 'supply' for GST purposes. The exclusion from the definition of supply for supplies of money2 does not apply to bitcoin because bitcoin is not 'money' for the purposes of the GST Act.3
  • The supply of bitcoin is not a 'financial supply' under s 40-5. Further, it is not an input taxed supply under s 9-30(2)(b).
  • A supply of bitcoin is a taxable supply under s 9-5 if the other requirements in s 9-5 are met, and the supply of bitcoin is not GST-free under Division 38 (for example, as a supply to a non-resident for use outside of Australia). A supply of bitcoin in exchange for goods or services will be treated as a barter transaction.
  • Bitcoin is not goods and cannot be the subject of a taxable importation under s 13-5(1)(a). However, an offshore supply of bitcoin can be a taxable supply under the 'reverse charge' rules in Division 84.
  • An acquisition of bitcoin will not give rise to input tax credits under Division 66, which allows input tax credits for certain acquisitions of second-hand goods.
  • A supply of bitcoin is not a supply of a voucher under Division 100.

 


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