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  • GST – removing the double taxation of digital currency

    On 9 May 2017, the Government announced that from 1 July 2017 it will align the GST treatment of digital currency (such as Bitcoin) with money.

    Before the law was amended, consumers who used digital currencies as payment effectively paid GST twice: once on the purchase of the digital currency and again on its use in exchange for other goods and services subject to GST.

    The legislative amendments ensure that from 1 July 2017 purchases of digital currency are no longer subject to GST.

    The GST Act and the GST Regulations have been amended. The amendments to the GST Act received Royal Assent on 30 October 2017.The corresponding amendments to the GST Regulations were made on 4 December 2017.

    No changes to the income tax treatment of digital currency are proposed.

    Administrative treatment

    From 1 July 2017 until the corresponding amendments to the GST Regulations were registered, the Commissioner accepts that affected taxpayers may have lodged business activity statements (BAS) in accordance with either the current law or in accordance with the new law.

    Now that the GST Regulations are registered, the following arrangements will apply:

    • taxpayers who correctly anticipated the law do not need to do anything.
    • taxpayers who did not anticipate the law (that is, acted in accordance with the current law) will be required to lodge requests for an amended assessment.

    You may receive a refund of overpaid GST if your amendment results in a reduction in liability, subject to restrictions. For more information see the explanation under the ‘Incorrectly classified sales’ heading on ‘Time limits on GST credits and refunds’ page.

    If an amendment results in an increase to your liability, then:

    • no tax shortfall penalties will apply, and
    • any general interest charge attributable to the shortfall will be remitted to nil for a period up until 28 days after the amending Regulations are registered . Penalty and interest charges may apply after that time.

    Legislation and supporting material

    The Treasury Laws Amendment (2017 Measures No. 6) Act 2017External Link received royal assent on 30 October 2017.

    Corresponding amendments to the GST Regulations were made on 4 December 2017.

      Last modified: 18 Dec 2017QC 52410