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