Meeting tax challenges inherent with Blockchain technology through the lens of Australia's GST

This article raises some challenges for administering Australia's Goods and Services Tax (GST) with Blockchain and proposes a solution to deal with them. These challenges arise due to the difficulties in characterising the GST treatment of certain transactions either due to the complexity of the legislation and the ambiguity in its application or the changing purpose of the transaction that necessitates a GST adjustment. Numerous exemptions are built into Australia's GST legislation marring a conceptually simple tax with complexity and ambiguity. While Blockchain can provide significant benefits for GST administration, including reducing compliance costs and allowing for real-time GST reporting including automated payments and refunds, difficulties in characterising some transactions for GST can result in these benefits not being fully realised. The article uses a case study to illustrate these challenges and suggests a solution to address them and to stimulate further discussion. Since GST adjustments are a necessary part of Australia's GST legislation and administration, the proposal may expand the value and usefulness for a Blockchain administered GST regime by allowing for any adjustments and the compensatory GST payable or refundable to also be made in real time. Australia is not the only jurisdiction that has GST exemptions giving this case study and the suggested Blockchain solution broad relevance.