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.
- 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.)
- 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 |
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