Fintech, Blockchain + Cryptocurrency Law

Does trading in cryptocurrency or using it to buy or sell goods and/or services in Australia attract GST?

GST + Digital Currency in Australia

Sales and purchases of Digital Currency

Trading in Digital Currency itself is not subject to GST from 1 July 2017.

This means that you do not charge GST on your sales of Digital Currency and similarly, you are not entitled to GST credits for purchases of Digital Currency.

Personal use of a Digital Currency to purchase goods and/or services in Australia does not attract GST

You do not have any GST consequences in relation to buying or selling Digital Currency, or using it as a payment, if you are not carrying on a business.

Businesses who use or accept a Digital Currency in Australia need to consider GST consequences

If you are carrying on a business in relation to Digital Currency, or as part of your existing business, or if you are accepting Digital Currency as a payment in your business, you need to consider any GST consequences that may arise.

Source: ATO Website - GST and digital currency

What does the Australian Tax office (ATO) consider to be Digital Currency?

Digital currency

Digital currency is a digital unit of value that has all of the following characteristics:

✅ Fully interchangeable with another unit of the same Digital Currency for the purpose of its use as payment;

✅ Can be provided as payment for any types of purchases;

✅ Generally available to the public free of any substantial restrictions

✅ Not denominated in any country's currency;

✅ The value is not derived from or dependent on anything else

✅ Does not give an entitlement or privileges to receive something else.

Some examples of Digital Currencies include:

Bitcoin, Ethereum, Litecoin, Dash, Monero, ZCash, Ripple, YbCoin.

What is not Digital Currency?

Things that are not Digital Currency for GST purposes include:

❌ Loyalty points provided by retailers that can only be redeemed for products and services specified by that loyalty scheme;

❌ 'Currency' used in online multiplayer games, that cannot be used outside the game under which the 'currency' is made available;

❌ 'Digital Currency' with value based on something else or that gives an entitlement or privileges to something else.

For example: A token that is aligned with an Australian or foreign currency, or gives you an entitlement to use software application services.

Source: ATO Website - GST and digital currency

What in the world is an NFT aka Non-Fungible Token and are they really traded on a platform called the OpenSea?

What is an NFT?

An NFT is a Digital Asset stored on the blockchain.

These Digital Assets hold information, like descriptions, properties, and media files like digital art or video, music, gifs, games, texts and memes + more!

The history of every NFT is recorded on the blockchain, meaning buyers can prove their ownership and creators can receive royalties every time their work is re-sold.

NFTs can be traded on marketplaces, proudly displayed in online galleries or used to access exclusive content and real-life experiences.

NFT's are:

✅ Unique, one-of-a-kind, and non-interchangeable.

✅ Provably scarce,

✅ Liquid, and

✅ Usable across multiple applications.

What does NFT stand for?

NFT is an acronym for Non-Fungible Token (which is often misspelled as Non-Fundable Token).

What is the difference between fungible and non fungible?

Cryptocurrencies are considered fungible.

This means that each unit or token or coin are the same and equal and can basically be replicated.

Non-Fungible tokens are the opposite.

They are unique and can't be replicated.

How are Non Fungible Tokens Created, Purchased + Traded?

OpenSea is currently the world's largest NFT marketplace and can be used to create, purchase + trade NFT's.

Credits:

This FAQ was created James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.