Canada Revenue Agency To Tax BitCoin Transactions

First time accepted submitter semilemon writes "The Canada Revenue Agency has started paying attention to BitCoin transactions, as it says users will have to pay tax on all transactions using the currency. From the article, "The CRA told the CBC there are two separate tax rules that apply to the electronic currency, depending on whether they are used as money to buy things or if they were merely bought and sold for speculative purposes. "Barter transaction rules apply where BitCoins are used to purchase goods or services," Canada Revenue Agency spokesman Philippe Brideau said in an email. In this situation, that means whatever you've received in exchange for your $1 worth of vegetables must be documented as a taxable gain of at least $1 somewhere. When it comes to trading BitCoins for profit, the tax man says there are tax implications there, too. "When BitCoins are bought or sold like a commodity, any resulting gains or losses could be income or capital for the taxpayer depending on the specific facts," ruled the CRA."

Comments

Kind of innevitable and entirely reasonable

[sg_oneill]

All seems reasonable to me. Our civil society is founded on the fact that since the government actually costs money, then people need to pay tax. Trying to hide money in bitcoin ought be seen as tax evasion, unless they are paying taxes on that money.

Libertarian types trying to sponge off the taxes of hard working tax payers via tax evasion need to stop being so greedy and stealing other peoples money.

Re:Kind of innevitable and entirely reasonable

[synaptik]

I haven't heard any libertarians espousing bitcoin as a means of evading taxes. I just sold mine from 2010, and I am well aware of the need to pay income tax on the net proceeds. Just like anything else.

Re:Kind of innevitable and entirely reasonable

[olip85]

Good move by the government, and it is a good thing that this is happening sooner rather than later. Yes, taxes suck, yes I want to pay lower taxes, etc, but roads and healthcare don't pay for themselves.

Re:Kind of innevitable and entirely reasonable

[gl4ss]

I'll go along with it if I can PAY my taxes in bitcoin...Until then @!#$@#$ off.

well you probably can't pay your taxes in apple shares either.

Re:Kind of innevitable and entirely reasonable

[spire3661]

Please expain to me why the government should get a cut if i transfer money from one human to another. Its insanity to expect a cut from EVERY FINANCIAL transaction. This level of taxation goes FAR BEYOND what it takes to run a nation.

Re:Kind of innevitable and entirely reasonable

[amiga3D]

Just so you know, tax avoidance is a bi-partisan thing.

http://latimesblogs.latimes.com/washington/2010/09/congress-taxes-irs.html

Re:Kind of innevitable and entirely reasonable

[Solandri]

Libertarian types trying to sponge off the taxes of hard working tax payers via tax evasion need to stop being so greedy and stealing other peoples money.

It all depends on efficiency.

- If the tax money collected by the government is spent on a program which yields a higher return (by increasing the nation's productivity) than if the money had remained in private hands, then tax evasion is stealing from other taxpayers.

- OTOH if the government is spending money on programs which aren't more efficient than private use (or are even losing money), then tax evasion actually helps the economy (in totalitarian states, it leads to black markets) and it's the government which is being greedy and stealing people's money.

There's a tendency for libertarians to pretend only the second state exists, and for big-government proponents to pretend only the first state is possible. The reality is that either state is possible. We have to be constantly vigilant to appraise the effectiveness of government programs, and not afraid to cut the ones which become wasteful. But likewise, neither should we immediately dismiss all government programs as wasteful.

Re:Kind of innevitable and entirely reasonable

[Jawnn]

This level of taxation goes FAR BEYOND what it takes to run a nation.

[citation needed]
First of all, there is precious little agreement on how much it actually takes to "run a nation", but in the case of the U.S., it is plain to even the most dim-witted that we are not collecting enough to cover that expense. Unless/until we can agree to spend less, more revenue is required. To suggest that it is excessive is to deny reality.

Re:Kind of innevitable and entirely reasonable

[AuMatar]

There's also programs that may be inefficient or cost money that society decides are worth paying for anyway. Not everything needs to be about making a profit. Those programs should still be watched to ensure that are as efficient as possible, but they shouldn't necessarily be killed. Social Security is an example of that- there's no financial gains for keeping old people alive and sheltered, but its something society decides is a good idea.

Re:Kind of innevitable and entirely reasonable

[dskoll]

So why do we need government again?

Because countries without governments tend to resemble Somalia, Afghanistan, Iraq and so on.

When a properly designed system could provide direct democracy

Right, because we all know how well e-voting works.

I think that those who favour no government and those who favour large intrusive governments should get to live in Somalia and North Korea, respectively, just to see where their extreme positions lead.

Re:Kind of innevitable and entirely reasonable

[spyfrog]

I thought you were an democracy. So it isn't the federal government who is to blame - it is you the people that continue to vote in people who either doesn't lower spending or raises taxes to balance the budget.
Blaming it on the federal government is plainly wrong - you Americans simply wants to eat the cookie and keep it. Balancing a budget is easy - either you cut spendings or your raises taxes. Your politicians does neither and you keep voting on them so you should all take the blame.

Re:Kind of innevitable and entirely reasonable

[alexander_686]

As given in the summary, it is sales tax (if used to buy things) or capital gains tax (if mined and sold, or speculated in.) Which, I think, would be common sense. In America, at least, you can’t avoid taxes by switching to barter, script, or other currencies – it’s fair market value that drives the underlying tax code.

Re:Kind of innevitable and entirely reasonable

[smash]

IF this is the case (I don't have the figures) I can tell you now that the government of Denmark spends a lot higher percentage of it's spending on PRODUCTIVE pusuits, rather than warfare and playing world police. PRODUCTIVE government spending is not a bad thing. Pissing money into the wind chasing ghosts and suppressing your population's civil rights, is.

Re:Kind of innevitable and entirely reasonable

[Captain_Chaos]

Do you deny that there are people who can't take care of themselves, through no fault of their own? If so, then you are delusional. If not, then you are an asshole.

Good for bitcoin

[vasanth]

good in the sense it is gaining legitimacy..

Re:Good for bitcoin

[DerekLyons]

They aren't legitimizing Bitcoins, the government is just reminding people that certain transactions create a tax liability - they don't care if the transactions are in dollars, Bitcoins, or jars of pickled hamster poop. The same rules apply to all three.

The summary (and TFA) is misleading.

[nuckfuts]

The CRA is not claiming a tax on "all transactions". They're claiming a tax on capital gains and income. If you make a transaction that results in a chunk of cash coming into your possession, or the equivalent in material goods, the value of that gain is considered taxable income. It has absolutely nothing to do with the medium of exchange. The CRA is not taxing BitCoin per se; they are taxing profits. They don't care whether you're using BitCoin or not. They're merely pointing out that using BitCoin as a medium of exchange does not confer some kind of exemption from taxes due.