Accepting crypto currencies as payment.
With the rise of crypto currencies, there is an ever-persisting temptation for many businesses to start accepting crypto currencies as payment.
As foreign as the concept may feel, it is in fact not a foreign concept at all.
Since the dawn of time many valuable items have been exchanged for other items, commonly referred to as barter.
Currently as of 29/12/2017, the Australian tax office treats businesses which accept crypto currency in the same manner as a barter transaction, ie any currency transferred to a business in exchange for goods, will pay tax on the value of the coin (using any reputable exchange) at the time of the transaction (Goods and services tax may also be charged to the business at the same value).
However, in ATO’s infinite wisdom, they have decided to use a different method to value business expenses bought by a business in the process of gaining assessable wealth.
Any business expense (including trading stock) bought via crypto currency, is allowed a deduction up to the value of the item purchased at an arms-length market price.
Goods and services tax credits are also allowable up to the arms-length market price.
As more and more payment options become apparent, we may see a mainstream implementation of crypto currency payment systems, and in time, various accounting software such as xero will implement feeding systems in order to systemize the accounting processes associated with crypto transactions (and making it easier for accounting firms, accountants and tax agents to keep track of transactions).
Currently there are a few options available for businesses wishing to implement a crypto payment merchant facility, with many promising alternatives soon to hit the market.
Facilities include Bitpay, coinpayments, BitPos etc. Alternatives are also emerging for consumers wishing to pay via traditional methods using their crypto currency as a source of funds (ie revolut etc). This allows traditional credit cards such as Master card and Visa to be used as a debit facility of crypt funds (for more clarification please see your accounting firm Melbourne).
With the fascinating world of crypto currency, (as long as the government does not ban crypto payments), we will see more arterial crypto currency service providers (ie crypto currency accountants / crypto currency tax agents / crypto currency book keepers etc), and genuine alternatives to traditional banking systems.
As long as Crypto payments can be accepted easily into business and is backed by the government, we will see the general public push away from the banking institutions which have overcharged and underserviced the public for far too long.
For more information regarding crypto currency accounting , please visit your local accounting firm Melbourne.