ATO’s view of Bitcoin
- The ATO view is that Bitcoin is neither money nor a foreign currency.
- Transactions through Bitcoins are more likely a barter arrangement with the same tax consequences.
- However, Bitcoin is an asset for CGT purposes.
Bitcoin for Personal Transactions
- No Income Tax or GST implications if the person simply pays for goods/services through bitcoin
- CGT on the disposal of Bitcoin will be disregarded- provided the purchase cost of the disposes Bitcoin doesn’t exceed $10,000.
Bitcoin for Business Transactions
- When Bitcoins are used for payments/receipts relating to Business, the same must be recorded in books at the fair market value obtained from a reputable bitcoin exchange.
- GST credits can be availed if the provider of Bitcoin charged GST for the supply.
Paying Wages through Bitcoins
- If an employee receives Bitcoins instead of Wages from the employer under a Salary Sacrifice Agreement, then the employer is subject to the provisions of Fringe Benefits Tax. In this case, the obligations to Withhold Tax & Superannuation provisions don’t apply.
- If there is no Salary Sacrifice Agreement, the Bitcoin payment will be treated as Normal Wages, and the employer has to comply with the PAYG Withholding Tax & Superannuation obligations.
Entities carrying on the Business of Mining Bitcoins
- Expenses incurred in relation to mining bitcoins are fully deductible.
- Losses from mining activity can be claimed subject to the non – commercial loss provisions.
- Income from mining bitcoins will be assessed as ordinary income.