Selling Your Property using Bitcoin

Good example of the value in tax advice.

Buy this sprawling Gold Coast mansion in digital currency Bitcoin - realestate.com.au
Tells the take of a financial planner keen to sell his qld property using bitcoin.

Recently in the may budget the Govt announced it sought to make changes to law so that Bitcoin and similar crypto "currencies" wouldnt face double taxation etc. That law has passed. HOWEVER the proposed changes to GST regulations that remove GST havent yet been enacted and arent even before the Parliament.

So selling your property using Bitcoin could result in a possible GST issue for the buyer.
This may hamper a confident sale.

 

Tax implications aside $500 BTC is $6.5 mil (at current price of $13,000/btc)

It’s easier to accumulate $500 in btc than it is to accumulate $6.5 mil in dollars

 

But if the buyer is not doing so in the course or furtherance of an enterprise they wont be liable for GST on the supply of bitcoin as they dont meet the definition of a taxable supply.

Interesting as well it may in fact be a financial supply and input taxed as bitcoin is now legal tender in Japan from 1 april 2017.

So it may be included under item 17

Australian currency, or the currency of a foreign country, the market value of which exceeds its stated value as legal tender, or an agreement to buy or sell currency of either kind the market value of which exceeds its stated value as legal tender

The Tax Institute claimed that the existing tax law defines currency and money in broad enough terms to include Bitcoin, noting that the Income Tax Act defines foreign currency to be 'currency other than Australian currency', and pointing out that if a foreign country decided to adopt Bitcoin as legal tender, a situation would arise whereby Bitcoin would fall within the meaning of 'currency of a foreign country' and 'currency other than Australian currency'. It explained:

Bitcoin would then automatically be required to be recognised as foreign currency for income tax and GST purposes, and money for FBT purposes. It is anomalous that such a situation could arise independently and outside the control of the Australian legislature or government bodies.

Well that happened in april this year thanks to the japanese.

I think one could well argue the administrative concession provided by the ATO is now irrelevant even if it is not passed.

 

Selling bitcoin is considered an enterprise as its difficult to argue its currency.its a taxable supply of..bitcoin

The choice to use bitcoin vs currency is the element of enterprise concerning spec trading and exchange of rights under barter. However the ato view isnt tested. Who wants to b their test case?

The ato clearly indicate amending if you assume law is passed. The ATO are only concerned with law. Not announced law.

Not quite sure how japan gets involved. Bitcoin is not currency

 

Read the definition of money in the GST act. Legal tender of another country is considered money of that country making it money under the definition of money in the GST act.

As bitcoin is legal tender in japan from 1 april 2017 it would meet the definition. The Tax Institute considered that and has accepted that situation would be correct.

Its a capital asset according to the ATO in their documents. Are you suggesting the exchange of all capital assets is an enterprise for GST purposes ?

 

Its not simple. My.point was it complicates a property sale when you ask for buyers to pay you in tazos. Footy cards or even bitcoin.

Why not insist on crown casino chips? Gold. Probably better accepted

 

Given the rise of bitcoin to gold and the future of blockchain technologies bitcoin is probably a better investment.

Gold has performed terribly over the past 5 years. US Dow would have been a better investment or australian property.

 

Big mac is a currency? It can be traded using a cross currency trade. Or local currency. But i cant give a person in china a big mac to settle and that is the bitcoin issue. Its not a settleable as it is not a physical commodity normally.

Exchanged on world markets direct vs indirect is how currency is traded. Commodities are traded using a currency. The jap view is so easily defeated in ato rulings. That view is shallow and i could use0 a exchangeable commodity. Eg a big mac. Arguable too the paypal.reference to currency is a derivative with different value. A hybrid currency perhaps

For now we must accept ato ruling as king.

Commodities need not perform. They just need to exist. Eg gold. Bitcoin. Bonds...they can.lose value

 

administrative concessions means not an issue. if it isnt passed (which it will if Australia wants any hope of being part of the blockchain space) then you would argue it is money from 1 April 2017.

the number of my clients affected NIL. yours ? probably nil

its an academic question of interest but relevance for most investors is the same as insurance for pigs flying from out of space into their investment property.

 

I question if the seller is truly a motivated seller or a publicity hound. If you list a property and allow payment bit bitcoin, paypal, amex - gold whatever. But dont tell the REA they have to take payment only in Bitcoin. I know if someone said that to me I would just shrug and walk away.

 

well if it was for publicity it worked as you bought it to my attention

 

PriceWaterhouseCoopers accepts payment of their services in Bitcoin

“Big Four” Accountancy Firm PwC Now Accepts Bitcoin Payments

 

Bitcoin is the hottest of commodities until you actually try to spend it

 

Buying crypto currencies is an issue too. Hefty fees & margins can make it more expensive to use than Amex / Paypal.