Bitcoin – What is it? What are the tax implication?
Bitcoin is a virtual currency with its usage increasing worldwide.
Tax authorities around the world including the ATO are considering how to assess Bitcoin transactions.
What is driving Growth?
– appreciating value, decentralised status (allows anonymity to everybody and “criminals”), no currency conversion costs when buying or selling overseas.
– online merchants using Bitcoin enjoy low transaction fees, currently 30-cents flat (rather than the typical 1-4% for traditional credit card providers charge).
What are the Tax Implications in Australia?
The ATO treats Bitcoin transactions as always being taxable in business. It would be prudent to treat all Bitcoin transactions as any other typical commercial transaction. Sales as income, purchase as expenses, change in value of Bitcoins held likely to be treated under the Foreign exchange (forex) provisions whereby currency gains and losses are assessable income or allowable deductions on a realisation basis.(see more)
Examples in Australia
Local retailer UdieGuys
For more details please refer to our July 2014 Newsletter, or contact our office