- BRW Lists
Published 24 June 2013 06:00, Updated 25 June 2013 07:03
The ATO says Bitcoin presents no greater challenge to tax authorities than cash transactions do. Photo: Bloomberg
The Australian Taxation Office is taking aim at Bitcoin users who could be attracted to the burgeoning virtual currency by the possibility of hiding transactions and dodging tax.
Despite the ability to trade virtual currencies like Bitcoin anonymously, the ATO is confident it can track users in efforts to stop fraud.
“Bitcoin is no more anonymous than physical cash and the ATO has experience in working with earlier forms of anonymous electronic money systems, and with physical cash, which are relevant for responding to new and emerging systems,” ATO senior assistant commissioner for the cash economy Michael Hardy told The Australian Financial Review.
The ATO confirmed that it is monitoring the currency, along with other electronic payment systems. Last week it was revealed that the currency is facing scrutiny from the US revenue authority.
“The ATO will continue to monitor its volatility, how widely it is accepted, its interaction with conventional currencies through exchange mechanisms and international developments,” said Mr Hardy.
Bitcoin has grown in popularity as an alternative for those sceptical of government-backed currencies and traditional commodities. Unregulated, the virtual coins are traded on peer-to-peer networks. Some vendors accept it as payment but it has been criticised for its volatility, having oscillated from lows of around $US2 up to highs above $US200. As of Friday, one Bitcoin was worth $US112.
The ATO is confident it will be able to catch misconduct. “Bitcoin, like many of the electronic money systems that have preceded it, has not yet raised any taxation issues that don’t exist with either physical cash or electronic payment systems,” said Mr Hardy.
Tax rules that apply to conventional commercial transactions generally apply in the same way to those conducted on the internet or using modern payment systems. Items bought using Bitcoins are still subject to GST, if applicable. The recipient may have to pay income tax if it is part of their business or other income.