The sudden rise in Bitcoin is something everyone is taking notice of. Even the Canadian Government, decided to address the bitcoin conversation. Depending on where you live in the world, bitcoin may or may not be a viable option for you. Each country treats bitcoin differently. So make sure to take a look at what the people in the bitcoin community say about owning and or selling bitcoin in your home country, before making any rash decisions.
Impact of owning bitcoins on your taxes in Canada
1. Canada Revenue Agency – The ones that had issued the report on bitcoins was the CRA, this is the very same Canadian federal agency that executes tax laws for the Canadian Government.
2.Trading / Buying – When it comes down it, whether you are trading or buying bitcoins from an individual, this is a transaction that the CRA is claiming as something that must be declared. It doesn’t matter whether or not actual money was exchanged. So long as an item (even if it’s crypto-currency) is being exchanged for a service, then it is something that must be recorded. The CRA claims that this is something that would happen in any form of bartering. Even if you were exchanging, say wood for a certain service, supposedly this transaction should be recorded as well.
3.Business – Now this is something that is a little bit more personal. Say you have a business, whether it’s a commercial business or a personal one – if you use or accept bitcoins as payment, then you are liable to be taxed for this as well. The amount in which you must declare is based off of the marketed price of the bitcoin at the time the transaction was completed.
4.Capital Gains – If you’re in the business of collecting and or selling bitcoins online, then whatever money you make doing so must be declared. Because a bitcoins marketed value is constantly changing, if you trade in your bitcoin at a price that is much higher than it had been previously – then the CRA requires that you record your profits from the transactions as capital gains.
Whether knowing this will affect your decision in buying and or selling bitcoins, this is something that now exists in the Canadian Government. It amazes me how quickly they addressed the issue, and the manner of which they spoke of it meant they must have done a fair bit of research in order to come out with the conclusions that they made. Now, some people weren’t really affected about the news. It doesn’t matter to them whether they have to do it or not, in fact – some long-time bitcoin sellers/traders have been doing this for years, without any prompting.
Of course there are people who dislike this clause as well. If only because bitcoin is marketed as something that the governments shouldn’t have jurisdiction over, something that flies under the radar. Obviously this isn’t something that every country will just let slide, and many more of them are starting to take notice.