It’s not often that both academics and students are learning a new suite of information simultaneously. The conditions need to be just right, where a new technology is uncharted, and has immediate and significant implications to a profession being taught at university.

Take cryptocurrency and taxation. Within the period of a standard degree, an entire frontier of information, and interpretation of legislation, needs to be digested and then taught by lecturers. This is real-time learning and teaching at its finest.

Our graduates need to be able to understand tax implications that cryptocurrency investors and blockchain users don’t even realise exist. How can lecturers approach cryptocurrency in their subjects when it evolves at such a rapid pace?

Students need current and relevant material

Dr Elizabeth Morton, Lecturer of Taxation at RMIT University’s School of Accounting, Information Systems and Supply Chain, explains how cryptocurrency has become a critical competency. Dr Morton says, “It is so important now that tax practitioners understand crypto and blockchain technologies because their clients are increasingly engaging in activities in this space.”

Likening it to a can of worms, Dr Morton describes just some of the nuances: “Crypto assets are not cash. They are not money, but they act like it. So taxpayers are not only buying cryptocurrencies as investments, but they can use them to purchase other crypto assets. From a Capital Gains Tax point of view, it essentially doubles the complexity. Not only do you have an acquisition and disposal, but also each time a client transacts with crypto – buying crypto through another crypto – that’s another acquisition as well as a disposal of that original asset.”

Elizabeth Morton

Dr Elizabeth Morton
Lecturer of Taxation at RMIT

However, Dr Morton contends this is an exciting time. It is an opportunity to embed forward-thinking learning, bringing this traditional discipline into a new era. Dr Morton is a member of the author team for Australian Taxation, 2nd Edition. She has been developing Technology Boxes throughout the upcoming edition of the textbook about cryptocurrency and blockchain technology. This gives students and teachers the opportunity to link the syllabus with this complex topic and consider the implications during each chapter.

Tax implications are unclear and complex

Tax practitioners have seen a huge increase in taxpayers engaging in crypto activity. Examples of the complexity of activity includes:

  • From simple cases: a tax client may have had some fun and bought Bitcoin, Dogecoin or the latest coin craze – are there personal tax implications?
  • To the more complex cases: decentralised financial products are available on blockchain – where participants can become liquidity providers contributing to liquidity pools and access ‘flash loans’ with a range of different types of crypto assets. How can we make sense of these complexities for students?
  • Then there’s Non-Fungible Tokens (NFTs) that can represent community groups or artwork or even games. Every time someone transacts this way, it could represent a taxable event. But what are the taxable characteristics students need to look for?
  • To the fundamental question over the characterisation of the decentralised autonomous organisation (DAO), what are the implications of it being considered a partnership for tax and legal purposes, in contrast with a company structure?
  • Let’s not forget taxpayers are not necessarily operating with Australian dollars, and they may not actually physically realise the revenue as Australian dollars either. How does the Australian GST apply?