The good news is that Australia is close to acknowledging the obvious: Digital currency should be treated as currency. The bad news is that this same thing hasn’t happened in the United States. Bitcoins can now be used to buy almost anything from coffee to surgery, but the government still doesn’t know what to think of this new innovation.
Treating digital currencies as currency relieves Bitcoin and other crypto-currency users and companies from many additional costs associated with its previous treatment in Australia. Previously Australia treated digital currencies as an intangible asset which included additional economic barriers such as the 10% Goods and Services Tax (GST). The Australian change wasn’t made just because of the obvious good public policy reasons- treat a currency as a currency. The change was made for the second best reason, at least for an economist, the change was made in reaction to Australia’s recent loss of a large Bitcoin company CoinJar. In December of 2014 CoinJar left Australia for the the UK to avoid the GST and take advantage of the decision in the UK to exempt digital currencies from their VAT. Therefore, Australia is making this choice in order to compete for business on the world stage.
