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The Tax Man Comes To Virtual Australia
shadrach_au writes to mention that what was being considered in the states is now apparently policy down under: your virtual assets can be taxed. The Australian Tax Office (ATO) is warning citizens to consider whether their gaming 'is a hobby or a business' and act accordingly. From the article: "If a virtual transaction has real world implications — if it can be attributed a monetary value — it attracts the attention of the Tax Office. Sites such as slexchange.com set rates for swapping Second Life's Linden dollars for 'real' money. 'The real world value of a transaction may form part of your taxable income, even if it is in Linden dollars,' the ATO spokeswoman says. 'In addition, there may be GST (goods and services tax) to consider.' In other words, if you are turning over the equivalent of more than $50,000 selling virtual jewelery to Second Life avatars, you must get an ABN (Australian Business Number) and register for GST."
I wonder if I can pay taxes in World of Warcraft gold.
It's still a real world transaction, so it shouldn't come as a surprise that it's taxable.
If you design graphic artwork for a website, you get taxed when you get paid for the work, even though it's not something designed to be used outside of the computer.
Game pieces are really no different.
That could actually be really bad. I've seen problems occur w/ that sort of transaction: The government assesses a levy in AU$ on your L$ income - but by the time you're ready to pay the levy, something happens to the exchange rate and you're toast.
This happened to some people when Enron fell apart: They took a stock option deal, and incurred a tax on the difference between the option price and the value at the time of acceptance; but by the time the stock actually vested, it was worthless. They were still stuck with the levy, and it bankrupted them.
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. - Ronald Wilson Reagan
Circumcision is child abuse.
>> ... otherwise it is taxation without representation, eh?
>>
No. The complaint about "taxation without representation" means something different entirely. The complaint was not that Britain didn't provide infrastructure in the colonies. They did, indisputably -- magistrates, courts, soldiers, all that jazz. The problem was that Britain refused to allow the Americans a say in how they were governed, both in how the money was spent and how those magistrates, courts, and soldiers acted. They could, for example, have one of their magistrates order the dissolution of the legislatures of the various colonies for any reason whatsoever, and the colonists had no redress against this. (See Declaration of Independence, its one of the "He has..." list of George III's usurpations.)
Now, an Australian paying taxes on his income from Second Life has both representation (he can ring the chap he voted into parliament and say "Hey, this tax on my Second Life earnings is irksome, cut it out. And by the way I have a pothole outside of my house, see that something gets done about it. Oh, and I'm not too thrilled about our foreign policy lately, change it." and vote against him if he doesn't like the response) as well as infrastructure (minimally, the physical security of the Australian while he is playing Second Life is partially ensured by men paid with tax dollars who stand ready to do violence on his behalf if required).
Help poke pirates in the eyepatch, arr.
Virtual currency should be taxed when, and only when, real-world currency is exchanged for it. Until such a point no taxable transaction takes place, since any goods exchanged between characters in-game remain the property of the game operator before, after, and during the transaction.
Once real money enters the picture, though, the transaction becomes as taxable as any other exchange of money for services.