Yesterday I wrote to the Australian Tax Office (ATO) about revising their Tax Ruling (TD 2014/25) regarding whether bitcoin was a foreign currency in light of El Salvador's adoption of bitcoin as legal tender.
Here's what I wrote:
Last week El Salvador passed a Bitcoin Law which makes bitcoin legal tender in that country.
In TD 2014/25 the Commissioner determined that whether or not bitcoin was legal tender in another country was the determining factor in whether it was foreign currency under Australia law. See para 32:
"32. The Commissioner considers that when defining 'foreign currency' as 'a currency other than Australian currency' in section 995-1, Parliament intended to use the term 'currency' in the same sense that 'currency' is used in the Currency Act - namely, a currency legally recognised and adopted under the laws of a country as the monetary unit and means of discharging monetary obligations for all transactions and payments in that country. Consistent with the Currency Act, this concept of currency is in turn divided into two types for the purposes of the ITAA 1997:
(1) Australian currency, and
(2) every currency that is recognised and adopted by the laws of any other sovereign State as the monetary unit and means of discharging monetary obligations for all transactions and payments in the respective sovereign state (that is, foreign currency).
Now that bitcoin has been recognised as legal tender in El Salvador the factual situation on which TD 2014/25 was based has reversed.
When will the ATO be announcing a revision to TD 2014/25?
Further details re ne El Salvadoran law here: @apshamilton/breaking-news-el-salvadorss-btc-bill-passes-by-supermajority.
When I wrote this I noticed that another person had already raised the issue and had got a response from the ATO that they had "passed it on to their crypto area."
Today I got the following response from the ATO:
This is a very interesting response as it shows they have read the El Salvadoran Bitcoin Law because they know it comes into effect in 90 days (something I did not mention in my enquiry).
It also shows that they are now actively considering the issue and have a proper response for their front-line staff to give.
As I noted immediately upon hearing the news of El Salvador's (then) plan to adopt bitcoin as legal tender, this was going to have international tax and accounting implications.
Watch my Hive feed - I'll be following the issue closely.
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