The Australian Tax Office has contacted me again for consultation around record keeping and cryptographic digital asset ledgers.
I spent the last 2 hours explaining the various different types of cryptographic digital assets, the differences between transactions on a public ledger, transactions on a private ledger and transactions performed in side-chain technologies and the various methods of record keeping.
Suffice to say, I think I confused them even more. I even tried explaining digital assets which have no intrinsic value as they have no method of of conversion to any recognised currency. Thus they would be equivalent to digital trading cards, where I trade a digital baseball card for a digital rugby card, neither of which has any real value until such time as it is bought and sold for a recognised currency or legal tender. Thus, how would I declare the value of the trade before it is sold to a legal tender?
The last part of the discussion was about: what is a digital asset.
Technically a Cryptokitty is a cryptographic digital asset, so is a book which can be downloaded in digital form over HTTPS, which would equate them to a property.
There is utility tokens that are consumed upon using a service, which would classify it for GST (Good and Services Taxes).
There is “Store of value” Digital Assets which could be equated to cash.
There is Digital Assets which are nothing more than computer generated 1’s and 0’s and have no intrinsic value until someone is prepared to pay for it. For example, storing stock images on a Blockchain for digital rights management and potential sale of the image. The image itself on the Blockchain has no value until such time as someone is willing to pay an amount for it. It was not purchased for any legal tender as it was a frame of light captured by a digital camera. The purchase of the digital camera is now equated to the value of the image taken?
It’s a nice twisted web we weave and was a thoroughly interesting conversation.
Formal announcements are due in early May.
Current announcement is here: