Authorities will seek to introduce legislation on digital currencies in 2016 and address the problem of its double taxation by exempting bitcoin from GST.

Australia may soon join the ranks of bitcoin-friendly countries as the government sustains its positive approach towards fintech innovations. According to a new manifesto, the authorities will create a legislative framework for digital currencies before the end of the year and also address the key bane of Australian bitcoin industry — the double taxation.

The document called “Government response to Australia’s FinTech priorities” states:

“We note that reports from the Senate Economics References Committee’s Inquiry into Digital Currency and the Productivity Commission’s Inquiry into Business Set Up, Transfer and Closure recommended that digital currency be treated as money for GST purposes to address the current ‘double taxation’ effect and that AML/CTF laws should apply to digital currencies.”

According to the document, the government is considering the application of AML/CTF laws to digital currencies to be included in the current statutory review of the AML/CTF Act which is due to be released in 2016.

The head of Australian Treasury Scott Morrison expressed the position of his administration even more straightforwardly. In an interview to the Australian Financial Review he stated:

“We will ensure access to concessional tax treatments for venture capital investments in fintech firms, will take action to prevent the double taxation of digital currencies — we won't be taxing digital currencies.”

The government manifesto also mentions blockchain, welcoming the ASX’s initiative to explore the potential of the technology for banking.

The current Australian Taxation Office rule attributes to bitcoin the status of “intangible assets” rather than money making it a subject to goods-and-services tax (GST). Bitcoin businesses also can be liable for the tax if they receive payments in bitcoin.

Last August the Senate Economics References Committee’s inquiry into digital currency recommended bitcoin along with other cryptocurrencies to be recognised as regular money. In October 2015, Australian governmental report assured that the emerging payment systems, such as bitcoin, will be regulated “in a graduated way”.

Despite the official declarations, Australian banks adopted rather hostile attitude towards bitcoin industry. In September a group of leading banks, including Westpac Banking Corporation and CBA, made an unexpected announcement addressed to the founders of at least 17 bitcoin startups at once, saying their accounts were about to be closed without any further explanation. This simultaneous attack on bitcoin companies led to the Australian Competition and Consumer Commission investigating whether the closing of the bitcoin traders' accounts complied with the law.

The obsolete Australian tax ruling has recently become a point in Japanese discussion on bitcoin taxation. While proponents of the law abolition pointed to the fact that Japan is the only G7 country to tax bitcoins the Finance Minister Tarō Asō stated that “Japan is not alone” alluding to Australian practice.