I live in a town of less than 400,000 people and I just saw a Bitcoin ATM. I don’t know who to use it but how cool am I for living near a Bitcoin ATM…
The Commissioner also is cool as he has released his thoughts on the tax treatment of Bitcoin transaction.
In summary, he thinks Bitcoin is not money (not widely used or general accepted as money) so using Bitcoin is like any barter transaction… For example:
I want to buy a coffee. I could:
1. Go to the coffee shop and use cash or a card to buy the coffee; or
2. I could go to the fruit shop, buy $4 worth of bananas and go to the coffee shop and see if they will swap my $4 of bananas for a coffee (barter); or
3. I could go to a Bitcoin ATM or Bitcoin exchange and buy $4 of Bitcoin (yes I know Bitcoins are worth over $600 – it is just an example) and go to the coffee shop and swap my Bitcoin for a coffee (barter).
There is no difference between example 2 and example 3 – effectively no difference between Bitcoin and bananas. Yes, Bitcoin has a exchange so has a standard value at any time so if you would prefer replace bananas with BHP shares as they have an exchange, the ASX.
The problem with this outcome is a GST issue. In example one the only GST remitted is by the cafe (around 40c) and I don’t claim it back.
But in examples 2 and 3 the cafe still remits its 40c but the Bitcoin ATM owner also remits about 40c on the sale of the bit coin it make to me. As I am not registered for GST, and even if I was it is unlikely either acquiring the bit coin or the coffee are a part of my enterprise, I can’t claim either of the GST amounts back.
Now I am off to get a selfie of me and the Bitcoin ATM…