The Australian national budget has announced plans to cut sales tax on bitcoin purchases, in a move designed to encourage use of the currency while eliminating a double-tax anomaly.
Goods and services tax is levied against both purchases and sales in Australia, and had until now led to instances of double taxation for bitcoin purchases.
Individuals transacting in bitcoin were liable for the tax on buying bitcoin and on selling bitcoin, thus introducing a controversial double tax for bitcoin transactions.
Once the budget proposals become law, it will see this tax removed for bitcoin purchases, effectively leveling the playing field with those dealing in traditional fiat currencies.
The Department of the Treasury had come under fire for the position in the run-up to publishing this year’s budget, with the policy following on from an investigation set up back in 2015.
Pending approval of the budget, the policy will become law on July 1, effectively eliminating the dual tax anomaly that has made Australia an unattractive jurisdiction for dealing in alternative currencies.
The move has been welcomed by analysts and currency investors alike, not to mention consumers who will now find it more cost-effective to transact through bitcoin and other alternative currencies.
The government addressed the policy as one of modernization, saying its steps in the budget “will make it easier for new innovative digital currency businesses to operate in Australia.”
The policy is the culmination of proposals first announced last year, as part of the government’s review into digital currencies and fintech more broadly.
It comes at the same time as the government is looking to support a business accelerator program for the fintech sector, designed to help new businesses establish and grow within the sector.
The proposals will allow for a two-year time period for companies to test their innovative financial technologies in a sandbox environment, similar to mechanisms adopted by other international governments in supporting development of these technologies.
According to the Treasury, the sandbox will still protect consumers, while giving innovators space to develop their work.
“Robust consumer protections and disclosure requirements will be in place to protect customers including responsible lending obligations, best interest duty, and the need for adequate compensation and dispute resolution arrangements.”