Canadian government officials may not think that bitcoin is legal tender, but thanks to a new startup, you can still pay your taxes in it - along with a lot of other bills. Canadian firm Bylls has become one of the first to offer bill payment in bitcoins. The service, only available in Canada at present, enables users to pay around 6,000 Canadian organisations - including the government - in bitcoins, by handling the fiat conversion for you.

Started by Eric Spano, Bylls was incubated at the Bitcoin Embassy, a bitcoin education and advocacy group in a 14,000 square-foot building in Montreal. The Embassy also recently became the Canadian affiliate chapter for the Bitcoin Foundation.

This isn't Spano's first rodeo. He has a background in finance, and originally founded a local bitcoin trading website called Northland Bitcoins. Canadian bank RBC closed that site's bank account, around the same time that it closed the account for Canadian bitcoin exchange Virtex. But instead of being discouraged, Spano searched for a new business model.

Most large utilities aren't equipped for bitcoin, which is irritating for miners or enthusiasts holding coins. "I figured why not take advantage of the financial system that already exists and enable them to interface together?"

He's talking about the Canadian online banking system, which is already set up to process fiat payments to a large database of established payees. Most banks in Canada have a 'pay bills' area, enabling customers to select everything from municipal governments to pay their property tax, through to their phone bills. And the Canadian Revenue Agency is a payee.

Strictly speaking, you actually pay Bylls in bitcoin. You then provide it with your account information for the relevant payee. It sells the bitcoins at the market rate on Canadian exchange Virtex, and settles the payments itself in fiat currency, via a payment processor.

Opening up 6,000 companies in Canada for bitcoin payments is quite a leap. For those payees not listed, Spano urges his customers to simply pay on their credit card, and then just pay the card off in bitcoin at the end of the month.

Users can pay up to $1000 in bills per month if unverified, or $5000 if they verify using the miiCard system. The fee structure starts at $3 for smaller bills, and progresses up to $6 for bills between $150 and $499. After that, Bylls charges 1%. Spano is also considering a subscription-based model.

The one missing link here is recurring bill payments, which would be useful for people with regular monthly payment plans, say, for their rent, gas or electricity bills. Those people will have to remember to conduct payments manually, admits Spano.

In other news, Canadian bitcoin exchange Vault of Satoshi is trialling its own integration with the Canadian bills payment system. Rather than allowing people to pay their bills from their Vault of Satoshi account, however, it will allow customers to send money to the exchange, once verified, enabling them to load their accounts from the bank. The firm is also beta testing a pre-authorised debit service."

"We are able to use bill payments with the top six banks, and with pre-authorised debit we cover every bank in Canada including credit unions," said VoS founder Michael Curry.

Bills image via Shutterstock