If you're the proud owner of a sizeable bitcoin collection, we have some bad news for you: the Australian Taxation Office has announced it will be taxing bitcoin transactions this year. What’s more, the online currency has been taxable since inception, which means you could owe the ATO money from as far back as 2009.
The ATO has urged people who are selling goods and/or services via bitcoin transactions to include the income in their business tax return or account for GST. Here's what the ATO had to say to our sister publication Business Insider Australia:
The tax legislation that applies to conventional commercial transactions also applies to transactions undertaken via the internet or with emerging payment systems.
It is most important that people engaged in any type of transaction with Bitcoin or other payment systems keep detailed records and evidence about what trades they make and the source of any assumptions about the value of any transaction in Australian dollars.
This will minimise the risk of there being a difference of opinion between a taxpayer and the ATO over the correct valuation and treatment of a transaction for taxation purposes.
We're not exactly sure how the ATO plans to track this — one of the advantages of bitcoin transactions is that they allow for a high level of anonymity. It's probably not something that you'd want to risk however: any discrepancies in tax returns will eventually catch up with you.
If you use bitcoins to occasionally sell things online, we wouldn't be too concerned about any of this. The ATO is chiefly interested in tax cheats who use the online currency to hide taxable income via wallet software. That said, it's always a good idea to keep records and/or receipts of any money you make just in case the taxman comes knocking on your door.
[Via: Business Insider Australia]
See also: What Is Bitcoin And How Can I Use It?