In the latest hurdle to beset the cryptocurrency sphere in Australia, a new government tax paper has listed Bitcoin among the methods which make it difficult for authorities to track tax avoidance.
The difficulty of bitcoin taxation
The Re:think paper published by the treasury states that when the current Australian tax system was designed, “[n]ew ways of transacting, including cryptocurrencies such as bitcoin, were not contemplated.”
The end result, the government says, is that:
“[t]hese developments make determining the appropriate tax outcome for a particular company in a specific country difficult, and raise concerns about the ability of companies to relocate profits to minimise their tax.”
Business in Australia has faced an increasingly hostile environment in terms of tax due on cryptocurrency operations. The past 12 months has seen tax initiatives clarified by the Australian Tax Office, which have caused Bitcoin operators such as Coinjar to move offshore in order to avoid double taxation, among other issues. Now, in conjunction with the government, the ATO appears to be clamping down on those outfits, which are based offshore but still service Australian citizens with reduced tax obligations.
“Every non-resident company that derives taxable income from Australian sources is also required to pay tax in Australia,” the new report continues, specifically relating to corporate taxation requirements.
The latest reiteration comes not long after a decision not to review the tax policy towards cryptocurrency, with the Senate choosing to make current policy more of a permanent fixture. ZDNet also notes a broader Australian movement to address corporate tax evasion, with the recommendations of a G20 action plan, of which the country is a contributor to be “finalized by December.”
‘Robbery by choice’
In another example of double taxation sanctioned by Australian financial policy, the Sydney Morning Herald today took issue with the dynamic currency conversion (DCC) option recently offered to Visa and MasterCard holders by Australian banks. The scheme DCC relates to offers those using their card overseas to process foreign currency transactions in Australian dollars, instead of the local currency. If AUD is selected – often, the paper states, by those mistakenly assuming that currency conversion fees would thereby be eliminated – a further fee of 5% is levied on the transaction for “dynamic currency conversion.”
“As far as bank robberies go, this one is bigger, and just as fiendish, as any,” it says, further referring to the implementation as “robbery by choice” for targeting unwitting consumers. The fee is split between the merchant, the card provider and a middleman known as the DCC provider.
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