Bitcoin has been described as a type of “virtual currency” where users can pay for goods and services, and can even create their own bitcoins to generate more currency.
But countries around the world have continued to grapple with whether bitcoin could be considered currency or some other form of personal property.
How bitcoin – and other cryptocurrencies – are defined will have broad ramifications for how they are handled by consumers and governments, including how they are dealt with under national taxation systems.
At an inquiry on Wednesday the Australian tax commissioner, Chris Jordan, conceded there was a push by some proponents to have bitcoin treated like money, but added it did not meet the current definition of legal tender. However he left open the possibility that this could be changed in the future.
“There’s a definition in the Tax Act of money. It’s got to be the legal tender of a country. We can’t say it’s money. If this grows more and more maybe the definition needs to change,” he said.
A change to the definition of legal tender would require amendments to the Tax Act by the federal parliament.
The tax office issued guidance earlier in August that said bitcoin was considered an “intangible asset” under the Australian taxation system, which would means it was subject to the GST.
A tax office senior assistant commissioner, Michael Hardy, said: “The ATO has consulted extensively with bitcoin experts, businesses, industry bodies and other external stakeholders to develop this guidance and explain the obligations of bitcoin users.”
“People involved in buying or selling bitcoin or other cryptocurrencies – whether individuals or businesses – are encouraged to read our guidance. If their circumstances are not covered by the guidance, they can seek a private ruling by contacting us.”
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