The GST Act is being amended to ensure that digital currency, such as Bitcoin, is disregarded for GST purposes unless the supply is made in exchange for a payment of money or digital currency.
To achieve this, a definition of “digital currency” will be inserted into the GST Act. Under the new definition, a digital currency has broadly the same features as legal tender. In particular, the value of a digital currency must derive from the market’s assessment of its value. A digital currency’s value cannot be based on the value of anything else, so it must not have, for example, a value pegged to Australian or United States dollars.
The currency units must be useable as consideration for any type of supply, and must be generally available to the public.
Units will not be considered digital currency if they give the holder benefits (such as memberships or vouchers), other than entitlements incidental to holding the unit or using it as consideration.
When the new definition passes into law, no GST will apply for supplies of digital currency made on or after 1 July 2017.
Until now, GST could be imposed several times on a digital currency.