The Treasury Laws Amendment (2017 Measures No 3) Regulations 2017 were registered on Mon 4.12.2017 (No. 3 Regulation).

They amend  the main GST Regulations, to allow for ‘digital currencies’ (broadly fungible digital units of consideration that are valuable only as consideration – see actual definition below). This change is part the measure announced by the Government in the 2017-18 Federal Budget to align the GST treatment of ‘digital currency’ with money.

  1. Initially, the Parliament passed the Treasury Laws Amendment (2017 Measures No 6) Act 2017, the thrust of which was as follows (see precise changes below):
    • to insert a definition of ‘digital currency’ into the GST Act and then then include ‘digital currency’ (alone with ‘money’), the supply of which was not relevantly a ‘supply’ (s9-10(4)), or the acquisition of which, was not relevantly an ‘acquisition’ (s11-10(4)).
    • to give the Commissioner the power to set the basis for valuing a unit of ‘digital’ currency (as the Commissioner already had to value ‘foreign currency’ – for GST purposes (s9-85(2)). (My inquiries, to date, have not disclosed a ‘digital currencies’ valuation instrument, issued by the Commissioner.)
  2. Then this regulation amends the GST Regulations, to include the supply of ‘digital currency’ as a ‘financial supply‘ – along with the supply of ‘money’ (r40-5.09, item 9). These changes are extracted below, too.

The amending Regs also make minor technical amendments to the tax law.

[Federal Register of Legislation: No. 3 Regulation; FJM; LTN 233, 5/12/17; Tax Month Dec 2017]

**Digital Currency’ Amendments to the GST Act made by Treasury Laws Amendment (2017 Measures No 6) Act 

9-10  Meaning of Supplies

(4)   However, supply does not include:
(a) a supply of *money unless the money is provided as *consideration for a supply that is a supply of money or *digital currency; or

(b) a supply of digital currency unless the digital currency is provided as consideration for a supply that is a supply of digital currency or money.

9-85   Value of taxable supplies to be expressed in Australian currency

(2)   In working out the *value of a *taxable supply, any amount of the *consideration for the supply that is expressed in:
(a) a currency other than Australian currency; or

(b) *digital currency;

is to be treated as if it were an amount of Australian currency worked out in the manner determined by the Commissioner.

11-10  Meaning of Acquisition

(3)  However, acquisition does not include:
(a) an acquisition of *money unless the money is provided as *consideration for a supply that is a supply of money or *digital currency; or

(b) an acquisition of digital currency unless the digital currency is provided as consideration for a supply that is a supply of digital currency or money.

40-5   Financial supplies

(1)   A *financial supply is input taxed.

(2)   Financial supply has the meaning given by the regulations.

195-1  Dictionary

In this Act, except so far as the contrary intention appears:

digital currency
means digital units of value that:

(a) are designed to be fungible; and

(b) can be provided as *consideration for a supply; and

(c) are generally available to members of the public without any substantial restrictions on their use as consideration; and

(d) are not denominated in any country’s currency; and

(e) do not have a value that depends on, or is derived from, the value of anything else; and

(f) do not give an entitlement to receive, or to direct the supply of, a particular thing or things, unless the entitlement is incidental to:

(i) holding the digital units of value; or

(ii) using the digital units of value as consideration;

but does not include:

(g) *money; or

(h) a thing that, if supplied, would be a *financial supply for a reason other than being a supply of one or more digital units of value to which paragraphs (a) to (f) apply.

*Digital Currency’ changes to the GST Regulations made by Treasury Laws Amendment (2017 Measures No 3) Regulations 2017

40-5.09   What supplies are financial supplies

(3)   For subregulation (1), the interest is an interest in or under the matter mentioned in an item in the following table:

Item An interest in or under…   
9 Australian currency, the currency of a foreign country, or an agreement to buy, digital currency or sell any of these 3 things currency of either kind

 

40-5.12 What supplies are not financial supplies (Act s 40-5)

For subsection 40-5(2) of the Act, the supply of something, or an interest in or under something, that is mentioned in an item in the following table is not a financial supply:

Item   Supply of, or an interest in or under…

4        A payment system, except to the extent that it is digital currency

 

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