This edited version of the Compendium of More on bitcoin atm emmett id is not intended to be relied upon. It provides no protection from primary tax, penalties, interest or sanctions for non-compliance with the law. This is a compendium of responses to the issues raised by external parties to: This compendium of comments has been edited to maintain the anonymity of entities that commented on the Draft Determination.
The Finance Ministry of Germany has declared: Germany's BaFin the Federal Financial Supervisory Authorityin classifying bitcoin as units of account Rechnungseinheitenhas not more on bitcoin atm emmett id accepted bitcoin as a means for discharging monetary obligations in Germany.
Rather this classification under German law simply means that bitcoin is a unit of value, not being legal tender, that serves as a private means of payment in barter transactions. This classification is for the purposes of German banking law to ensure that entities trading in Bitcoin or undertaking bitcoin mining pools will be subject to regulation. Germany does not recognise bitcoin as legal tender, nor does it consider bitcoin is foreign currency. As Bitcoin is not legally recognised as a unit of account and form of payment by the laws of any other sovereign country it is not 'foreign currency' for the purposes of Division of the ITAA Bitcoin is not classified as e-money or a foreign currency, the Finance Ministry said in a statement, but is rather a financial instrument under German banking rules.
It is more akin to 'private money' that can be used in 'multilateral clearing circles', the Ministry said. While Germany does not recognise Bitcoin as foreign currency, it is recognised as a unit of account by at least one sovereign, and it is recognised as a form of payment but more on bitcoin atm emmett id currency.
It was submitted that Bitcoin is 'currency' taking into account the ordinary meaning, legislative context and legislative purpose. It is accepted that sections more on bitcoin atm emmett id and 11 of the Currency Act require transactions and payments, respectively, to be done or made in either 'the currency of Australia' or 'the currency of some country other than Australia'. For a relevant financial transaction or payment to be legally effective, there is no third permissible option.
It is also accepted that 'the currency of some country other than Australia' necessarily requires recognition by a sovereign State other than Australia. It is an uncontroversial position that Bitcoin does not have State recognition.
Accordingly, Bitcoin cannot be 'currency of Australia' or 'currency of some country other than Australia'. The draft TD appears to take the view that because the Currency Act only permits the use of two specific types of currency, the definition of 'currency' only comprises those two elements.
Sections 9 and 11 of the Currency Act only permits - and only identifies - those two types of currency.
But the wording of those provisions does not provide that the definition of 'currency' only comprises those two identified elements. The provisions of the Currency Act indicate that State recognition and adoption of a monetary unit under more on bitcoin atm emmett id are critical to a currency being deemed to be an acceptable currency for transactions and payments covered by the Currency Act.
However, those same provisions do not force a conclusion that those elements are critical and necessary in a definition of the term 'currency'. In the exercise of his statutory duty to administer the taxation statutes, the Commissioner should not rely on an argument that Bitcoin is not an accepted currency for the purposes of the Currency Act. The purposes of the Currency Act do not include ensuring that taxpayers are taxed correctly on their transactions or enabling taxpayers to correctly calculate their tax liabilities.
This more on bitcoin atm emmett id does not oblige nor permit the More on bitcoin atm emmett id to administer other laws over which he has no administrative jurisdiction. The extent to which non-taxation statutes do or do not adequately deal with the rising emergence of Bitcoin and similar digital currencies does not govern the manner in which the Commissioner administers the taxation laws to ensure that a taxpayer pays the correct amount of tax.
The submissions disagree with the view expressed in paragraph 25 that it is not critical to conclude on whether Bitcoin more on bitcoin atm emmett id 'currency' and 'money' under the ordinary meanings of those terms. The term 'currency', as it is used in the section of the ITAA definition of 'foreign currency', is not itself statutorily defined by either the taxation statutes or, as explained above, by the Currency Act. Accordingly, the ordinary meaning of the term is relevant, more on bitcoin atm emmett id into account the legislative context and purpose.
This is not inconsistent with the statute providing 'its own particular conception of currency' paragraph Why Bitcoin is 'currency' under its ordinary meaning. CoinJar, an Australian Bitcoin startup, estimates that Bitcoin is currently being used byAustralians. Applying such technologies, which are common and pedestrian in relation to transactions involving accepted forms of 'money', to Bitcoin will result in perception and acceptance that Bitcoin is as valid a medium of exchange as other forms of 'money'.
While it is impossible to predict the level of use or of acceptance in the future, the recent experiences and investments of Bitcoin enterprises certainly suggest that the sector anticipates use to become more widespread and accepted. Shavers and Bitcoin Savings and Trust [2] found that 'bitcoin is a currency or form of money, and investors wishing to invest in [the accused's entity] provided an investment of money. The court's decision adds to a growing body of more on bitcoin atm emmett id in the US markets and references in US law that assume bitcoin to be a currency.
For example, the US Treasury Department's director of the Financial Crimes Enforcement Network called companies that deal in bitcoin 'financial institutions' that had 'the same obligations as any money services business'.
And a California court attempted to shut down the US Bitcoin Foundation on the grounds that it was operating an unlicensed 'money transmission' business. However, this view is based on US taxation law. The trend in the US to increasingly recognise Bitcoin as currency or money more on bitcoin atm emmett id commercial and economic purposes clearly shows that it would be proper to characterise Bitcoin as 'currency' under the ordinary meaning of the term.
In the definition of 'foreign currency' there is no explicit or implicit requirement that 'foreign currency' must be a currency of 'a country other than Australia' or otherwise have the recognition of a particular State. They accept the Commissioner's interpretation of 'Australian currency' but in the context of the definition of 'foreign currency' in section of the ITAA'Australian currency', however defined, is only a subset of 'currencies'.
The provisions of Division of the ITAAin relation to which the section definition of 'foreign currency' is critical, do not implicitly or explicitly require that the 'foreign currency' in question be recognised by a State in order for the provisions to be operative. In fact, there is no mention of 'foreign country', 'country other than Australia', 'another country' or similar within the Division. The construction of Division does not set any legislative or operational impediment for Bitcoin to be treated as foreign currency.
It is possible to compare the Australian dollar value of Bitcoin at specific points in time to calculate any 'currency exchange rate effect'.
It is also possible to measure More on bitcoin atm emmett id by reference to the money whether in Australian dollars or in the monetary unit of another sovereign State exchanged for it or by the market value of the goods or services exchanged for it. While there will be administrative challenges in ensuring compliance, these challenges will exist regardless of which regime Bitcoin is taxed under. The explanatory memorandum to the Act that introduced Division indicates that the legislative context was to provide a statutory framework under which a gain or loss that occurs as a result of currency exchange rate movements or fluctuations is brought to account at an appropriate time for tax purposes.
Bitcoin as foreign currency does not contravene the legislative purpose and context of the section definition of foreign currency. It would enable fluctuations and changes in the value of Bitcoin to be treated at an appropriate taxing point, on revenue account.
How is 'foreign currency' relevant for tax purposes? Paragraph 4 discusses the anti-overlap rule in subsection 4 of the ITAA in relation to foreign currency gains. It is suggested that there more on bitcoin atm emmett id an equivalent comment in relation to subsection 4 of the ITAA which provides that there is no double deduction for a foreign exchange loss. Treating Bitcoin as foreign currency will: A taxpayer, or different taxpayers, undertaking the same transaction in the same circumstances at different points in time will not be taxed differently simply because some changes for example in the level of use, or if it receives recognition by sovereign states means that it starts being 'foreign currency' according to the interpretation expressed in the draft TD.
The submissions request more on bitcoin atm emmett id the Commissioner, in consultations with government, lobbies for legislative change more on bitcoin atm emmett id provide greater certainty for taxpayers who will increasingly use Bitcoin, other virtual currencies and other electronic or digital media of exchange which may be developed in the foreseeable future.
The Draft TD then identifies that the Currency Act approach of permitting transactions and payments relating to money in Australia to only be undertaken with either Australian currency or currency of some other country which the submission concedes bitcoin is neithergives rise to a concept of 'currency' under the Currency Act that aligns with the State theory of money.
The Draft TD considers the approach the ITAA takes of defining foreign currency as the antithesis of Australian currency demonstrates an intention that Parliament intended the term currency in the ITAA to be used in the same sense as it is used in the Currency Act. It would be a peculiar and inconsistent outcome if the Tax Acts recognised something as a more on bitcoin atm emmett id currency but that thing could not be legally used to fulfil monetary obligations in Australia as a foreign currency under the Currency Act.
The Commissioner is not going beyond his statutory duty by referring to the Currency Act in order to identify the legal meaning of the term Australian currency. This is a normal part of the statutory interpretation process, and in doing so the Commissioner is not seeking to administer the Currency Act. The Currency Act does not need to have a taxing purpose in order for its definition of Australian currency to be relevant to determining the legal meaning of that undefined term in the ITAA The Commissioner considers the concept of 'currency' in the Currency Act is a relevant consideration in determining what Parliament intended when defining foreign currency in the ITAA as the antithesis of Australian currency.
This approach is explained in detail at paragraph 28 of the TD with supporting case law. The Draft TD is not stating that the ordinary meaning is not relevant. The Draft TD addresses the ordinary meaning and concludes that bitcoin does not satisfy that ordinary meaning. The reference to the conclusion on the ordinary meaning not being 'critical' is to highlight that even if the usage and acceptance of bitcoin throughout the community where to increase substantially in the future such that bitcoin might be considered to satisfy the ordinary meaning, the legislative context and purpose requires more on bitcoin atm emmett id the meaning of currency for the purposes of the ITAA is different to the ordinary meaning of money and State recognition is required.
The figures provided in the submission do not demonstrate that bitcoin usage and acceptance is widespread throughout the community.
The more on bitcoin atm emmett id eftpos card referred to in the submission does not actually involve a customer providing bitcoin to businesses who accept eftpos, the card merely converts the customer's bitcoin to Australian dollars and provides those Australian dollars to the business.
The submission refers to more on bitcoin atm emmett id eftpos cards and ATMs being 'symbols' of widespread use and that the investment in the sector means that it can be 'anticipated' that bitcoin will become more widespread.
The Commissioner cannot interpret the law based on what may or may not happen in the future. Shavers and Bitcoin Savings and Trust related to non-tax legislation and has no relevance for determining the ordinary meaning of currency in the ITAA The US Inland Revenue Service have published their view that bitcoin is not currency for tax purposes. It is important to note that US law is not relevant to the interpretation of Australian tax law. The submission claims that bitcoin being more on bitcoin atm emmett id as a foreign currency does not contravene the legislative purpose and context of the section definition of foreign currency as it would enable fluctuations in the value of bitcoin to be treated at an appropriate taxing point on revenue account.
However, the correctness of this claim depends on the fundamental issue of whether Parliament intended things, such as bitcoin, which are not recognised by a State as a legal form of discharging monetary obligations, to be covered by the term 'foreign currency'. The fact that something does not contravene the legislative purpose and context of the provision and it is also something that fluctuates in value does not mean that Parliament intended it to be captured by Division The critical issue is whether more on bitcoin atm emmett id thing is a foreign currency.
As requested by the submission, the TD now also includes a reference to the corresponding rule in subsection 4 of the ITAA that prevents double deductions for foreign exchange losses. The conclusion in the TD that bitcoin is not foreign currency will not need to be reconsidered if in the future bitcoin usage and acceptance become widespread throughout the community because the TD concludes that the meaning of foreign currency, in light of its legislative context and purpose, essentially requires State recognition for its use as a form of discharging monetary obligations in a foreign country.
This outcome provides a robust framework, it does not create inefficient use of resources, and provides fairness and certainty for taxpayers. The ATO consulted with Treasury very early on in addressing this issue. The ATO has advised Treasury, the Assistant Treasurer and the Treasurer of the ATO view with respect to bitcoin and the alternative views and compliance issues being raised by the community.
Treasury have not raised any concerns with the ATO view. The submission questioned the ATO view that bitcoin does not satisfy the ordinary meaning of 'money' as per Moss and Travelex. They consider the position suggests the ATO view could change over time.
If Bitcoin were to be recognised as a currency by any sovereign country, then Bitcoin will be a foreign currency.
Again, this suggests the ATO position is potentially changeable and subject to the approaches taken by any particular country, and therefore uncertain. The submission did not accept the ATO approach of following Mann and Proctor in rejecting a functional approach. It was considered that a more flexible interpretation is open.
By contrast with Mann, Nussbaum maintains that all things must be counted as money that functions as money. Ultimately, according to Nussbaum it is society and custom that determines what is money. Mann was sceptical that the predecessor of the Euro the European Currency Unit could develop into money because it was not issued by a State, but instead was supra-national.
Hancock demonstrates, notwithstanding the rules of statutory interpretation cited in the Draft TD in the context of the Acts it refers to, another approach legally is open which would accord more with commercial reality. The Submission also suggested that the ATO has interpreted Emmett J's reference in Travelex to 'money' as being 'generally accepted' too narrowly from a legal point more on bitcoin atm emmett id view.
The correct level of generality should be whether there are merchants who operate so as to accept Bitcoin as money.
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