How the New ATO Guidance Affects CoinJar Users

In August, the Australian Tax Office (ATO) released a guidance paper on the tax treatment of crypto-currencies. The ATO stated that the supply of bitcoin is taxable for goods and services tax (GST) purposes. We wrote previously about the steps we’re taking to understand their guidance.

Here’s what we have determined.

The ATO’s Guidance

When you buy bitcoin in Australia, the price quoted to you will include 10% GST, which the seller must pay to the ATO.

When you convert bitcoin to Australian dollars, the guidance is more complicated. If you are not a GST-registered business, GST will not apply when you place a sell order.

However, if you are a GST-registered business you may need to collect the GST as part of your sales.

How this affects you

Buying bitcoin

  • If you buy bitcoin at CoinJar, you will be charged 10% GST as of October 3.
  • We’ll generate a tax invoice showing you how much GST you paid.

Selling bitcoin

  • If you are a customer selling bitcoin for personal use, there will be no change.
  • If you’re selling bitcoin on behalf of a GST registered business, you will be prompted to register your GST status at point of sale.
  • When you submit a sell order, we will ask you to confirm GST collection.
  • CoinJar will generate a recipient created tax invoice (RCTI) on your behalf for every sell order with GST applied.

At this point, these changes affect CoinJar Filler only. Other CoinJar products, such as the recently launched CoinJar Swipe, will not be affected by this determination.

The Future of Bitcoin in Australia

We’ve worked hard to confirm these changes with the ATO and integrate them into our existing products.

*While CoinJar is now required to charge GST from 1 October 2014, we have elected not to yet pass this additional charge on to our users until 3 October 2014.

This means that CoinJar users will be paying the same amount for buying bitcoin before and after the GST change was applied until 3 October 2014. During this grace period, CoinJar now receive only 90.9% of the amount paid.

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.

If you have any questions please get in touch with us, via Twitter, Facebook or CoinJar Support.

*Please note that we have edited this blog post since publication to further clarify the grace period.

44 Comments

  1. nick gaff

    Cant beleve the government wants to tax something that is not even real!
    Thanksypu governments

  2. ryan

    Hi
    Can you clarify. If i buy $100 worth of bitcoin, am i charged $10 gst? Or is the gst levied on the 2% fee only so fee would go to 2.2%? Cheers
    Ryan

    1. Hi Ryan, the 10% GST is levied on the total cost, including the fee and the cost of bitcoin.

      Cheers,
      Zhoe

  3. scott

    How will this work when sites overseas don’t charge the GST, this may really hurt all your hard work. My two cents.

    1. Hi Scott, as an Australian GST-registered business we do have have to integrate GST in our service, but we are doing the best we can to continue to be accessible and useful for our CoinJar users!

      Zhoe

  4. Wesley

    I really hope that the bitcoin industry in Australia manages to get the government to make a different determination or else this is going to kill the future of bitcoin in Australia.

    Thanks for everything CoinJar but I think I, and a lot of other people, will be moving on now.

  5. Paul Benjamin

    Looks like bitcoin will be another thing that is much cheaper to import than to buy in Australia.

    Good job ATO!

  6. andy

    “If you buy bitcoin at CoinJar, you will be charged 10% GST as of October 3.”
    Ouch. It’s no wonder the price of bitcoin has dropped. It’s not as appealing anymore when governments put their greasy hands all over it 🙁
    thanks a lot budgies.

  7. It is odd that they are treating Bitcoin as a product or service, rather than a currency.

  8. This is a joke, thanks for fighting for us. (hint hint, it’s like you didn’t even try)

    10% on top? Does anyone pay 10% on top for gold?

    I have been a long term bitcoin user, I am currently looking for alternatives as I believe you’ve just shot yourselves in the foot, no one can do business at 10% vs the rest of the world.

    I will move my business and that of all my family and friends once I can suggest an alternative. We cannot afford a 10% hit in our investment portfolio.

  9. Andrew Haddad

    You have had a good run, but you know as well as I . No one will be stupid enough to buy BTC for 10% +2% + Spread

    EG: BTC = $400

    Coinjar BTC = $453

    Money Wasted doing absolutely nothing $53

    ———————————

    I Just went onto Circle.com Within 4 minutes, I made an account >Went to Settings > Linked account > Added my VISA Debit and for $46AUD I bought $45AUD worth of BTC

    Now this is what will make BTC worth it.

    1. Glenn

      Thanks Andrew. I just went to Circle and had the same experience as you. Amazing stuff.

  10. I live in the United States and this is bound to set a start for all countries around the world to begin doing the same thing. I am by no means a tax expert but since the world is on the verge of financial collapse crypto currency could spell the needed item to unite the world instead of the way it is currently being done. Crypto currency just makes more sense than standard paper currency. I am rather thankful that crypto currency is growing in popularity and value because I want to be able to trade with other countries in the world.

  11. Craig Dermer

    Since Bitcoins are homogenous, doesn’t it mean I can now buy them from a non Australian seller 10% less than you? Or perhaps you guys need to set up a sort of sharing network where non GST individuals can trade GST free? Peer to peer so to speak. You can still get your commission as the enabler?

    1. Hi Craig, as CoinJar is an Australian GST-registered business, we will have to charge GST for the bitcoins we sell, as required by the Australian Tax Office. For non-GST registered CoinJar users, GST will not apply when you place a sell order.

      1. Stevey

        But gst will apply at the other end for the buyer. The incentive to buy through an Australian registered company has now gone. Private trades and international brokers will now be the only option. As some else mentioned, why would you pay GST when you’d need to recoup that 10% before making anything yourself.
        It’s a currency, not a good or service.

    2. Dimitri

      Yes this is called an escrow service and they already exist, but being that Coinjar is an Australian registered business they still need to comply with the greedy tax law of Australia. Solution would be to move the business offshore.A few aussie companies are already making the move I don’t expect Coinjar will have any other choice either if they focus on being worldwide they don’t need to limit themselves for .AU region. Look at the big picture and Coinjar will flourish

  12. chris mills

    I think this means I will know need to move my coin to a usa based exchange. It’s a pity as you guys were very reliable….

  13. Luke

    I am sorry to say this but I don’t think I’ll be buying off CoinJar anymore…

  14. Steve

    Really very sorry to hear this. Coinjar is a great wallet app, love the 2FA security – and it makes using Bitcoin easy. And with Coinjar Filler it’s a simple “on ramp” for folks to get started with Bitcoin.

    But an extra 10% on purchases kills Coinjar Filler. Why would anyone buy $400 worth of Bitcoin for $440 – when they can just as easily buy it for $400 elsewhere? Unlike physical products, there is no advantage to buying locally.

    And no Coinjar Filler means no fees for you – undermining your entire business model (to the point it is no longer feasible I suspect). Time for me to get my funds out while I still can.

    I honestly don’t understand why the ATO thinks it is sensible to charge 10% GST on what is essentially a foreign currency purchase. They may as well charge 10% GST on withdrawing money from your own bank account! 🙂

    ATO decision is not your fault – but it does suck!

  15. diggly doogly

    i really appreciate coinjar and am sorry that the current rules ares as they are.

    i hope that soon things will move along to a friendlier vibe for you 🙂

  16. Matt

    Sorry, but waiting 3 days for funds to appear and paying an extra 10% means your filler service will no longer be of use to me

    1. Hi Matt,

      Funds should generally clear in to your Filler within 1 business day (though some banks do take a little longer to remit to us). If you’re having any issues receiving deposits, please don’t hesitate to reach out to Support.

      Thanks!

  17. Beau

    It still amazes me how the ATO has ruled, effectively labelling Bitcoin a good or service? It is neither and all they have done is sabotaged another great Australian business. All from a government that talks about stimulating non mining sectors of the economy and building new and exciting ventures in Australia. Well done ATO!

  18. Dean

    If i was to buy some $US would i have to pay 10% GST?

    1. Hi Dean, we do not currently offer USD on our trading platform. Cheers, Zhoe

  19. Jim Greer

    its all about revenue for the govt. stop using coinjar and go back to bitstamp and other offshore exchanges that doesn’t charge gst, simple as that.

  20. Tim

    You guys have built a really nice business but in this kind of industry the ATO decision is a complete killer. It’s a global cyber world now move swiftly and incorporate in a more bitcoin friendly country or merge with another company that is outside this clueless and draconian legislation and keep your customer base.

    1. Dimitri

      Yep it’s their only move left. Very unfortunate for coinjar and investors

  21. Ryan

    Hi Guys,

    It says you won’t be charged 10% until the 3rd of October?? I’ve been charged today for buying bitcoin and had the gst added

    1. Hi Ryan, CoinJar is required to charge GST from 1 October 2014 but our users will be paying the same amount for buying bitcoin before and after the GST change was applied until 3 October 2014. During this grace period, CoinJar now receive only 90.9% of the amount paid.

  22. Nick

    Basic foods such as eggs are GST free. Maybe CoinJar could start selling eggs from Maddies farm?
    Users could then trade eggs for bitcoins OTC

    1. EggCoin

      Nick is on a chicken-dinner winner here. Free Range Bio-Dynamic Organic BitCoin^H^H^H^H^H^H^H Egg tokens, trading & bartering!

      First one to register ChookCoin, EggCoin, FowlCoin has my vote.

      Of course would need to rebrand a little, CoinJar -> EggJar, Filler -> Layer, Swype -> Flap, etc.

  23. Daryl

    Exactly, What time on the October the 3rd Will I start having to pay gst on any bitcoin purchases?

    1. Hi Daryl, CoinJar users will starting paying GST when they buy bitcoin using our service from 12am Friday 3 October 2014. Cheers.

  24. Joe

    Think I might start buying btc from another source this is so bad.

  25. MyMoniker

    I don’t know who would use Filler now unfortunately. If the ATO arbitrarily killed of my business I would take them to court.

    Greedy ATO parisites; wanting to coercively extract 10% for nothing!

  26. Sly Gryphon

    Zhoe, “CoinJar now receive only 90.9% of the amount paid” — that is not true.

    CoinJar will get 100% of the amount paid, and then need to give 9.1% LESS ANY GST CREDITS FROM BUYING BITCOIN.

    e.g. If you bought a bitcoin for $390, you would have got a $35 GST credit; if you then sell that bitcoin for $440 you only pay net $5 to the government ($40 – $35), and get to keep the other $45 as margin.

    If you simply bump up all of your prices by 10%, without accounting for the input credits, then you would be breaching the legislation about price gouging when introducing GST. You cannot increase by 10%, but have to take into account your input credits.

    Note that if you buy from a GST registered business, then the GST credit can be claimed immediately, but even if you buy from a non-registered person, if you are purchasing the item (the bitcoin) for resale, then it is a second hand good and you can offset the GST paid on sale. https://www.ato.gov.au/Business/GST/Claiming-GST-credits/Special-rules-for-specific-GST-credit-claims/?anchor=Secondhandgoods#Secondhandgoods

    So, you always get GST credit on the purchase price; claiming the price will go up by 10% is simply not true.

  27. Dood

    You guys need to set up overseas asap. Don’t lose your jobs and your business over this. Move to NZ?

  28. This is a sad day for the Australian Bitcoin Community. Going offshore might work in the short term, but it feels like that is really shooting the Australian Bitcoin community in the foot.

    Personally I can’t wait to see decentralized exchanges, like Bitsquare, start to gain some traction. Keeping the trades between individuals would solve so many of these issues and protect our privacy at the same time!

  29. Tracey

    Dumb question, but I’m still not clear … Will you be quoting prices including GST? Or will you be adding the GST on top of your spot price?

    1. Hi Tracey, that is not a dumb question at all! The spot price that you see is GST-exclusive. However, when you receive your quote for your price order you will see a breakdown of the GST-inclusive price. If you have any questions, please contact our Support team – http://bit.ly/1prmhkA. Cheers

Comments are closed.