An inquiry by the Senate Economics References Committee into an appropriate framework for digital currencies in Australia was successfully moved in Parliament on Thursday by the committee's chair, NSW Labor Senator Sam Dastyari.
The inquiry is set to evaluate the appropriate definition of cryptocurrencies under Australian taxation laws, and is expected to deliver its final report on March 15 next year.
Australian Digital Currency Commerce Association (ADCCA) chairman Ronald Tucker was quick to support the move, saying today that he hopes it will result in a "correction" of the current taxation treatment of the cryptocurrency.
"I am pleased the inquiry announced today will look at tax treatment issues, which I hope will lead to a correction of the current interpretation of bitcoin as taxable supply," said Tucker in a statement.
"ADCCA recognises the need to bring digital currencies under the auspices of appropriate regulatory bodies such as the Australian Transaction Reports and Analysis Centre (AUSTRAC), to ensure the highest standards of consumer protection and safeguard national security," he said.
In late August, the Australian Taxation Office (ATO)on the taxation treatment of bitcoin and other cryptocurrencies, timed to coincide with the lodgement of Australians' 2013-14 income tax returns.
The guidance paper and rulings called for individuals' bitcoin transactions to be treated like barter transactions with similar taxation consequences, unless they are doing it for business purposes.
The ATO said in its guidance that generally, there would be no income tax or Goods and Services Tax (GST) implications for individuals if they are not in business or carrying on an enterprise, and if they pay for goods and services in the cryptocurrency.
Under the guidelines, any capital gain or loss from the disposal of bitcoin paid by an individual to purchase goods or services for personal use or consumption will be disregarded as a personal use asset. However, individuals using bitcoin as an investment may be subject to capital gains tax rules when they dispose of it, as they would for share assets.
"The ATO's paper has unfortunately taken the position to treat the supply of bitcoins the same way as an exchange of a commodity; something that would involve the costly and impractical imposition of GST on the supply of bitcoins," said Tucker last month in response (PDF) to the ATO's guidance. "Bitcoin by its very nature is used as a currency and a store of value, and we believe it should be treated by the ATO in the same way as other financial inputs such as foreign exchange."
Now, Tucker is calling for government regulation to encourage innovation, entrepreneurship, and growth in the digital currency sector, with the hope that such support from the government will help create more jobs in the space, while making Australia a leader in financial technology.
"The overwhelming majority of bitcoin consumers and businesses use the technology for legitimate reasons, and are doing great things to grow the digital economy in Australia," he said. "The emergence of this exciting new global industry is something Australia is well positioned to take advantage of."
Tucker said that appropriate government oversight would provide certainty for the digital currency sector and discourage illicit activity.
The Senate inquiry comes as other international markets,, move to take advantage of growth of digital currency commerce.
However, other countries,, continue to eye bitcoin and other cryptocurrencies with an ambivalent eye.