Bitcoin transactions should be considered as barter transactions with similar tax outcomes, according to the Australian Taxation Office (ATO).
The ATO issued a guidance paper and rulings on the tax treatment of Bitcoin and other crypto currencies as income tax return time rolls around.
"The guidance paper and draft tax rulings issued today provide certainty for the Australian community on the ATO's treatment of crypto-currencies within the current legislation framework," senior assistant commissioner Michael Hardy said.
For individuals who use Bitcoin to buy goods and services for personal use, any capital gain or loss from disposal of the Bitcoin will be ignored as a personal use asset, as long as the bitcoin cost is $10,000 or less.
But those who use it as an investment could have to follow capital gains tax rules when they get rid of it, as they would for shares of similar assets.
Businesses will need to record the Bitcoin transaction value as part of their ordinary income, and must charge GST when they supply Bitcoin and could be subject to GST if they get bitcoin in exchange for goods and services.
If there are going to be tax outcomes, people should keep a record of the date of the transaction, the amount in Australian dollars, what the transaction was for and who the other party was (if it is just the Bitcoin address).
The ATO said there may be fringe benefit tax outcomes for businesses that use bitcoin to pay employee salaries.
