Australian Senate Launches Inquiry into Bitcoin and Digital Currencies

Australian Senate chamber

The Australian Senate’s Economics References Committee announced this week it would hold an inquiry into bitcoin and digital currency implications, aiming to present its findings to parliament in March 2015.

Chaired by Senator Sam Dastyari of the Australian Labor Party, the committee will examine the potential economic impact of digital currencies across various industries, including banking and retail.

A further aim is to help decide Australia’s framework for regulating and taxing digital currency-related activities, in the hope that legal clarity will see the country take a leading role in developing the new technology.

Australian Senator Sam Dastyari, Chair of the Economics References Committee

Industry support

Ronald Tucker, who heads industry lobby group the Australian Digital Currency Commerce Association (ADCCA), welcomed the news and praised both Senator Dastyari and the Economics References Committee for its foresight on the matter.

In a statement, Tucker said:

“ADCCA recognises the need to bring digital currencies under the auspices of appropriate regulatory bodies such as the Australian Transaction Reports and Analysis Centre (AUSTRAC) to ensure the highest standards of consumer protection and safeguard national security.”

By encouraging innovation and entrepreneurship, he said, Australia’s parliament will help create more jobs and make the country a financial technology leader.

Tucker also called for “a correction” to Australia’s current tax treatment of bitcoin provided by the Australian Tax Office (ATO) in August.

Many in Australia’s bitcoin industry expressed dismay at the definition of digital currencies as a taxable supply, a condition that adds 10% to the price of bitcoins sold on Australian exchanges and forces businesses to keep detailed records of transactions and price fluctuations.

Tax issues

In August , the ATO defined bitcoin and digital currencies under existing tax laws, which subjects them to Australia’s Goods and Services Tax (GST) for sales and Capital Gains Tax (CGT) in a manner similar to assets such as equities.

Exchange and payment processor CoinJar posted on its blog that bitcoin sales to customers would include 10% GST starting 3rd October.

For customers converting bitcoin to Australian dollars, it said, “the guidance is more complicated”. People converting bitcoin for personal use up to $10,000 would not be subject to tax, but anyone selling bitcoin on behalf of a GST-registered business would need to keep tax invoices for every transaction.

CoinJar also joined the call for changes to tax rules:

“In many ways the guidance has brought clarity to the position of bitcoin users in Australia. However, we don’t believe the ATO’s guidelines are ideal for bitcoin in this country. We believe in a simpler financial system, and we will continue work with the ATO to help them discover a fairer position.”

Call for self-regulation

The ADCCA is promoting a self-regulatory approach to digital currency industry governance, stating the following in a newsletter:

“An emerging common consensuses is that a self-regulatory model through countries industry associations, along with healthy government oversight, may be the most practical and effective means of addressing the need for an international conversation as well as eventual framework on global FinTech matters, such as bitcoin and other digital currencies.”

Australia will host a summit for G20 nations in Brisbane this coming November, and Tucker sees this as a great opportunity to discuss issues surrounding new currency concepts in a formal setting; hopefully, he said, with Australia as the leading voice.

The ADCCA also participated in last month’s Responsible Finance Forum in Perth, organised in part by the World Bank, IMF and G20. Digital currencies and surrounding issues were “very much a hot topic” at the event, the association said, adding that was a forerunner to the main summit.

Australian Senate image via Shutterstock