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Edited version of private advice
Authorisation Number: 1012589945466
Ruling
Subject: GST and bitcoins
Question 1
Are you making an input taxed supply under section 9-30 of the A New Tax System (Goods and Services Tax) Act 1999 when you supply bitcoins?
Answer
No, the supply of bitcoins is not an input taxed supply.
A transfer of bitcoin is a 'supply' for GST purposes. The exclusion from the definition of supply for supplies of money does not apply to bitcoin because bitcoin is not 'money' for the purposes of the GST Act.
The supply of bitcoin is not a 'financial supply' under section 40-5 of the GST Act. Consequently, it is not an input taxed supply under paragraph 9-30(2)(b).
A supply of bitcoin is a taxable supply under section 9-5 if the other requirements in section 9-5 are met and the supply of bitcoin is not GST-free under Division 38 (for example, as a supply to a non-resident for use outside of Australia).
A supply of bitcoin in exchange for goods or services will be treated as a barter transaction.
Draft Goods and Services Tax Ruling, Goods and services tax: the GST implication of transactions involving bitcoin (GSTR 2014/D3) provides a more detailed explanation and is attached for your reference.
Question 2
Is the supply of cryptocurrencies other than bitcoin, an input taxed financial supply under section 40-5 of the A New Tax System (Goods and Services Tax) Act 1999?
Answer
Whether a particular cryptocurrency is a financial supply will depend on the relevant facts and circumstances.
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You intend to offer exchange services for a fee in relation to Bitcoins.
You will buy or sell bitcoins in return for Australian dollars and will also provide foreign currency exchanges with an exchange rate based on the bitcoin rate.
Bitcoin is a 'cryptocurrency' created and based on an open source cryptographic protocol which is not administered by any entity or organisation. Instead, it relies on peer-to-peer validation of transactions and who 'owns' the bitcoins. Bitcoins can be created through a method known as 'mining' and they can be traded with businesses or people who accept bitcoin or exchanged through established bitcoin exchanges.
Bitcoin is not linked to any national currency and is not recognised in Australia as a payment system.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 subsection 9-30(2).
A New Tax System (Goods and Services Tax) Act 1999 Division 40.
A New Tax System (Goods and Services Tax) Regulations 1999 subregulation 40 5.09(3).