Regulating Down Under: Australian Taxation Office Preparing Bitcoin Guidelines

In early April the National Australia Bank (NAB) decided to cut ties with the bitcoin community and close any accounts that primarily dealt with the digital currency on May 2. The NAB believes dealing with digital currencies is too risky. Less than one week later, Australia’s first bitcoin ATM went live in Sydney, the first of several proposed ATMs in the land down under.

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Regulating Down Under: Australian Taxation Office Preparing Bitcoin Guidelines

In early April the National Australia Bank (NAB) decided to cut ties with the bitcoin community and close any accounts that primarily dealt with the digital currency on May 2. The NAB believes dealing with digital currencies is too risky. Less than one week later, Australia’s first bitcoin ATM went live in Sydney, the first of several proposed ATMs in the land down under.

To round off the month, the Australian Taxation Office (ATO) is preparing to meet with head figures of the Bitcoin industry along with accounting and tax experts to prepare guidelines on taxing and regulating all virtual currencies. The taxation guidelines are expected to be made public on June 30.

This is not the first time Australia has brought up taxing Bitcoin. Last June the ATO advised Australians selling goods via bitcoin to include the income on their tax return. The upcoming consultation is stepping it up a notch and will try to figure out how to deal with bitcoin as income, investments, transactions, and how to treat mining and Bitcoin exchanges.

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Bitcoin advocates hope to work with the ATO to further legitimize bitcoin as a legitimate currency in the eyes of the state and remove irregular laws, like the fact that goods and services are taxed twice in every bitcoin transaction.

The proponents for the digital currency are hopeful they will get a fair shake. Asher Tan, founder of Australian-based Coin Jar commented on the proceedings and noted that “how they approach this new vehicle, which hasn’t been seen before, it takes a bit of ­consideration as to whether any existing legislation outright applies to it. Regulation is important but it has to be considered; it shouldn’t be too hasty but all regulators should try Bitcoin before they regulate it.”

Overall Bitcoin in Australia has been well received. Companies are allowed to trade in the currency and the purchase and mining bitcoins is not illegal.

Earlier this month, Professor David Glance, director of software practice at the University of Western Australia, said that NAB’s severance with Bitcoin was an “odd reaction” given the fact that the Australian exchanges were far smaller and provided less of a risk than colossal ones like Mt Gox and evidence from companies showing something illegal was absent. Hopefully, he and the rest of the Australian Bitcoin community won’t see any more odd reactions in legislation come June 30.

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