If you trade digital currency in exchange for money or digital currency with an Australian resident who is located in Australia, your supply will be an input-taxed financial supply. You don't need to pay GST on input taxed supplies you make.
Example: selling digital currency to a resident located in Australia
Adnan is buying and selling digital currency through an enterprise he carries on in Australia and is registered for GST.
Adnan sells CostyCoin (a digital currency) for Australian dollars to CoinWallet Pty Ltd, a digital currency exchange.
CoinWallet is an Australian resident company that is located in Australia and is registered for GST.
Adnan's supply of CostyCoin is an input taxed financial supply and he will not have to report and pay any GST for this supply.End of example
If you trade digital currency in exchange for money or digital currency with a non-resident who isn't located in Australia, your supply will be GST-free.
If you trade digital currency through a digital currency exchange and you can't identify the counterparty, you may use the location of the digital currency exchange to treat a supply as GST-free if the exchange is not located in Australia.
You don't need to pay GST on any GST-free supplies you make.
Example: selling digital currency through a digital currency exchange located outside of Australia
Roxy Trader Pty Ltd is registered for GST and sells CostyCoin (a digital currency) through Cran-exchange Inc, a digital currency exchange located outside of Australia.
Roxy Trader cannot identify the residency or location of the counterparty to its trades made through Cran-exchange.
Roxy Trader may use the location of the overseas exchange to treat its sales of CostyCoin as a GST-free supply.
Roxy Trader's supply of CostyCoin made through Cran-exchange is GST-free and they will not have to pay any GST for this supply.End of example
You must register for GST if you make GST-free supplies of digital currency and you:
If you only make input taxed supplies of digital currency, you don't need to register for GST.
If you don't exceed the GST turnover threshold, you may choose to register for GST if you're trading digital currency and carrying on an enterprise.
You can claim GST credits for making purchases related to your:
- GST-free supplies of digital currency.
- input taxed financial supplies of digital currency if you don't exceed the financial acquisitions threshold.
If you exceed the financial acquisitions threshold, you can claim reduced GST credits for certain reduced credit acquisitions.
Example: expenses related to input taxed supplies
Digi-coin Pty Ltd is registered for GST and only makes input taxed supplies of CostyCoin (a digital currency) through CryptoP2P Pty Ltd.
CryptoP2P Pty Ltd charges a 1% transaction fee for every sale or purchase made through their platform. These fees include GST.
Digi-coin exceeds the financial acquisitions threshold because all its purchases relate to making input taxed financial supplies.
Digi-coin can't claim GST credits for the transaction fee.End of example
For more information on claiming GST credits, see:
- GSTR 2003/9 Goods and services tax: financial acquisitions threshold.
- GSTR 2004/1 Goods and services tax: reduced credit acquisitions.