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Edited version of your written advice
Authorisation Number: 5010055043639
Date of advice: 20 February 2019
Ruling
Subject: ‘Foreign currency’ for the purposes of section 995-1 of the Income Tax Assessment Act 1997?
Is the taxpayer’s cryptocurrency a “foreign currency” for the purposes of section 995-1 of the Income Tax Assessment Act 1997?
Answer
No
This ruling applies for the following period:
Year ending 30 June 2019
The scheme commences on:
01 July 2017
Relevant facts and circumstances
The taxpayer has acquired an amount of cryptocurrency via instalment during the financial year
The taxpayer settled a payment with an amount of cryptocurrency during the financial year
The taxpayer retains an amount of cryptocurrency in a Cryptocurrency wallet
Relevant legislative provisions
Tax Administration Act 1953
Income Tax Assessment Act 1997 subsection 108-5(1)
Income Tax Assessment Act 1997 Division 230
Income Tax Assessment Act 1997 section 230-20
Income Tax Assessment Act 1997 Division 775
Income Tax Assessment Act 1997 subsection 775-14(4)
Income Tax Assessment Act 1997 subsection 775-30(4)
Income Tax Assessment Act 1997 section 995-1
Currency Act 1965 subsection 8(1)
Currency Act 1965 section 9
Currency Act 1965 subsection 9(1)
Currency Act 1965 section 11
Currency Act 1965 subsection 11(1)
Financial Transaction Reports Act 1988 subsection 31(1)
Commonwealth of Australia Constitution Act 1901 subsection 51(xii)
Reasons for decision
Summary
The Commissioner has previously considered this matter and published the decision in Tax Determination TD 2014/25.
Detailed reasoning
The Commissioner considers that when defining 'foreign currency' as 'a currency other than Australian currency' in section 995-1of the Income Tax Assessment Act 1997 (ITAA 1997), Parliament intended to use the term 'currency' in the same sense that 'currency' is used in the Currency Act - namely, a currency legally recognised and adopted under the laws of a country as the monetary unit and means of discharging monetary obligations for all transactions and payments in that country. Consistent with the Currency Act 1965, this concept of currency is in turn divided into two types for the purposes of the ITAA 1997:
1. Australian currency, and
2. every currency that is recognised and adopted by the laws of any other sovereign State as the monetary unit and means of discharging monetary obligations for all transactions and payments in the respective sovereign state (that is, foreign currency).
As the cryptocurrency is not a monetary unit recognised and adopted by the laws of any other sovereign State as the means for discharging monetary obligations for all transactions and payments in a sovereign State, it is not 'foreign currency' for the purposes of Division 775 of the ITAA 1997.
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