For individuals, when buying items online for personal use or consumption, there is generally no income tax or GST implications.
Any capital gain or loss realised by disposing of bitcoin is generally disregarded (as a personal use asset), provided the value of the bitcoin is less than $10,000.
ATO advice is that certain records should be kept for any bitcoin transactions, including:
- the date of the transactions
- the amount in Australian dollars (which can be taken from a reputable online exchange)
- what the transaction was for
- who the other party was (even if it’s just their bitcoin address).
For more information:
Crypto-currency in Australia had until recently been subject to what was labelled “double taxation”. Legislation affective from July 1, 2017 aligned the goods and services tax (GST) treatment of digital currency with money. Before this, anyone using cryptocurrency as payment effectively paid GST twice — once when buying the bitcoin and again on its use in exchange for goods and services subject to GST.
The ATO deems bitcoin to be neither money nor foreign currency, but also holds that it can be regarded as an asset for capital gains tax (CGT) purposes.
As far as conducting transactions with bitcoin, the ATO states that it views such transactions as akin to barter arrangements.
In conducting a business transaction therefore, the same process would be followed as when, for example, receiving a non-cash consideration under a barter transaction, with the consideration recorded at fair market value. This can be obtained from a reputable bitcoin exchange.
Carmen Du is a Chartered Accountant in the Brisbane office, delivering tailored financial advice with expertise in consolidation and reporting to support business growth.
