As of this week, Australia’s tax authorities have ruled that, for purposes of law, Bitcoin is not a currency. What does that mean? Most importantly, this ruling classifies Bitcoin as a “good” for the purposes of the law, which means that the “Goods and Services Tax” (GST) applies to any transaction of Bitcoin. That means that any Bitcoin-for-goods transaction within Australia will be taxed twice, on both the Bitcoin and the goods. This is catastrophic to the growth of Bitcoin commerce in Australia.

“A transfer of bitcoin from one entity to another is a ‘supply’ for GST purposes,” said the Australian Tax Office. “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.”

Few other countries have chosen to regulate Bitcoin in this fashion. Britain recently chose to eliminate VAT (their equivalent of GST) on Bitcoin purchases, though they elected to avoid officially recognizing Bitcoin as a currency. When an early draft of the new legislation was announced, CoinJar, one of the largest Bitcoin firms in Australia, moved to Britain. Other firms have closed in response to the news, as their business models ceased to be profitable under the higher tax rates.

It seems likely that this new legal philosophy will prove to be the end of Bitcoin business in Australia. However, the good news is that, in the long run, as Bitcoin grows to a position of prominence in the global marketplace, this sort of nonsense will grow unsustainably expensive for Australia’s economy. It’s probable that, in the long run, this new legislation will be overturned.