The Australian government has announced that in order to address the problem of ‘double taxation’ of digital currencies, it will work with the digital currency industry to find a solution.

“The Government recognises that that the current treatment of digital currency under GST law means that consumers are ‘double taxed’ when using digital currency to buy anything already subject to GST. The Government is committed to addressing the ‘double taxation’ of digital currencies and will work with the industry on legislative options to reform the law relating to GST as it is applied to digital currencies”, the release said.

The statements were made in a fairly detailed policy statement on FinTech, released by Australian Treasurer Scott Morrison.

“As Treasurer I want to help create an environment for Australia’s FinTech sector where it can be both internationally competitive and play a central role in aiding the positive transformation of our economy”, said Morrison.

Moreover, the government said it is also considering the application of anti‑money laundering and counter‑terrorism financing (AML/CTF) laws to digital currencies as part of the current statutory review of the AML/CTF Act due to be released in 2016.

“Removing the ‘double taxation’ treatment for GST on digital currencies and applying adequate anti‑money laundering and counter‑terrorism financing rules may facilitate further developments or use in the future”, it added.

Blockchain Technology & FinTech Advisory Group

Speaking of blockchain technology, the government said that though in early stages, the technology has the potential “to radically simplify the way our market operates end‑to‑end, with significant benefits to investors, participants, regulators and government agencies.” In this context, the government also welcomed the announcement by the ASX that it is exploring Blockchain technology for a new post‑trade solution for the Australian equity market.

Furthermore, the Government has established a FinTech Advisory Group to advise the Treasurer directly on issues important to Australia’s FinTech industry, such as identifying areas of potential future reform, and ensuring that the specific priorities of the industry are considered in the implementation of government policies. The Advisory Group is chaired by Mr Craig Dunn, Chairman of Stone & Chalk, Director of Westpac Bank and former CEO of AMP.

“Among other matters, the advisory group is exploring increased facilitation of digital advice models, regulation technology — or ‘RegTech’ —  the uptake of Blockchain technologies, the tax treatment of digital currencies, evolution of the Australian crowdfunding framework, data transparency and aggregation, and emerging insurance models.”

The release also included a statement from the Australian Transaction Reports and Analysis Centre (AUSTRAC). It believes that Blockchain or distributed ledger technologies have the potential to significantly reduce the costs of compliance and regulation imposed on reporting entities.

“This new technology can ensure that sensitive financial data used for intelligence purposes remains secure, transparent and protected through the use and application of encryption”, AUSTRAC said. “AUSTRAC will work with stakeholders to realise the potential of new technologies such as Blockchain, as well as co‑designing and developing these new regulatory approaches.”