How ‘bitcoins’ are treated for tax purposes
Bitcoin is a software-based online payment system, which the US Treasury has called a “decentralised virtual currency”. The media often refers to Bitcoin as a cryptocurrency or digital currency.
The ATO has issued a guidance paper, basically stating that bitcoin transactions are treated as barter transactions with similar taxation consequences.
As far as record-keeping is concerned, the ATO says that businesses should keep records of:
– the date of the transaction;
– the amount in Australian dollars;
– what the transaction was for; and
– who the other party was (even if it is just the bitcoin address).