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 recently 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).