The rapid development of digital currencies represents significant challenges for authorities in various countries. There has been uncertainty about the treatment of digital currencies under existing regulatory regimes around the world. Much of this uncertainty results from the fact that digital currencies are a relatively new development and current legislation is typically not designed with digital currencies in mind.
The legal nature of cryptocurrencies is commonly described as intangible property, a means of payment and a service. Therefore, from a tax perspective, cryptocurrencies could be covered by income and capital tax concepts as well as Goods and Services Tax (GST). Treating the same cryptocurrency as an asset and a currency is paradoxical and may create a number of issues potentially resulting in double taxation. Various countries experience similar issues but there is no common approach to taxation of cryptocurrencies as many governments have chosen to adopt a ‘wait and see’ position to regulation.
This article examines the legal nature and taxation of cryptocurrencies in Australia and Singapore. Both countries are considered to be cryptocurrency friendly jurisdictions in the Asia-Pacific region. Singapore has been positioning itself as a global hub for international trade since the second half of the 20th century and, as a result, has introduced various tax policies supporting trade and e-commerce. Australia is one of the major financial centers in the Asia-Pacific region that is also welcoming cryptocurrencies. Therefore, this article aims to compare Australian and Singaporean legislative approaches to cryptocurrencies and to identify some strategies helping to facilitate legal solutions to the tax treatment of cryptocurrencies.
Source: ssrn.com
