Australian Government Makes Good On Virtual Currency Pledge
The Honourable Scott Morrison MP, Treasurer of the Commonwealth of Australia, delivered the national budget Tuesday. Important initiatives for the island nation include investments into infrastructure and the empowerment of business ecosystems. Alongside these commitments, the Australian Department of the Treasury has sought advice from the government-organized FinTech Advisory Group and has repealed a twofold goods and services tax (GST) affecting digital currencies. As stated within the budget, “from 1 July 2017, purchases of digital currency will no longer be subject to the GST, allowing digital currencies to be treated just like money for GST purposes.”
The repeal brings closure to a tiresome controversy that for years troubled VC users down under who had to double-pay GST, first when purchasing a VC and then again when spending it. Under the GST Tax Act of 1999, virtual currencies, such as bitcoin, were not recognized as money. Leading up to the ruling, institutions like the Australian Senate Economics References Committee had alluded to the action taken today in thought exercises like the Inquiry into Digital Currency. The new legislation recognizes virtual currencies, alongside their fiat counterparts, under the 2006 Anti-Money Laundering and Counter-Terrorism Financing Act.
The legislative changes regarding VCs in Australia will be buttressed by the government’s $1.1 billion (AUD) National Innovation and Science Agenda (NISA). By encouraging early stage investments into Aussie startups, the NISA aims to help advancements in technology find footholds in Australia, particularly in FinTech ecosystems. New players in these ecosystems will have to prove themselves in a regulatory sandbox that was established by the Australian Securities and Investments Commission in December 2016. As described in the 2017-2018 budget, this proving ground has also been modified to include more access for businesses to “test a wider range of financial and credit services without a license.” The timeframe for evaluation within the sandbox has also increased to twenty-four months.
By “reducing barriers for innovative new entrants into the banking sector,” Australia is looking to fill the void left after the decline of its mineral mining boom with support for invention and FinTech. These legislative changes will help Australia retain its cutting edge in finance and commerce as the country enters into its twenty-sixth consecutive year of economic growth.