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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."
Canada has levied a large tax on professional developer tools. While Visual Studio was among the first to get taxed, no open source development tools were included as none was examined to be of "professional" level.
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.
Excuse the Unicode crap in my posts. That's an apostrophe, and slashdot is busted.
Go Fuck yourself.
Signed: A concerned Canadian Citizen.
And how exactly do they plan to accomplish this? Technical explanation required.
vos nescitis quicquam, nec cogitatis quia expedit nobis ut unus moriatur homo pro populo et non tota gens pereat.
Then the government must accept Bitcoins as payment for all services..
“He’s not deformed, he’s just drunk!”
Can't speak for Canada's tax laws but that's entirely consistent with US tax law. Capitol gains are taxable. Bartering is taxable. The only news is that by specifically naming bitcoin they're further legitimizing it.
Do you even lift?
These aren't the 'roids you're looking for.
good in the sense it is gaining legitimacy..
Electronic currencies are the cash of the future, if the government views them as legitimate it will be easier to convince retailers to do as well.
Back to trading in beaver pelts and buckets of maple syrup eh?
Can they pay the tax with Bitcoin?
Electronic currencies are the cash of the future, if the government views them as legitimate it will be easier to convince retailers to do as well.
You mean things like dollars and Euros?
You know - get paid directly into a bank account, pay for things with electronic transactions?
The point at which CRA can collect taxes is when the bitcoins are sold into Canadian dollars.
This is NOT how it works if you get paid in US dollars. you still have to claim those US dollars as income on your canadian taxes in canadian dollars. I can't for the of me figure out what exactly the fuck I'm supposed to do when it's not converted into CAD, and have just been writing down the USD amount . This probably isn't correct, but given the parity level of the dollar, any mistake made doing this is less than 4%, and likely not in my favor.
I can't imagine doing this for bitcoin where the volitility would fuck you over in a heartbeat. Sure I got paid 100$USD in bitcoin on thursday, but by friday it was worth 1$, so do I claim 100$USD income or do I claim 1$ when I convert it to CAD?
The only newsworthy in this, is the fact that the authorities are looking into BitCoin transactions, thereby raising BitCoins legitimacy in the playingfield.
Pretty much every country on the planet taxes both capitol gains and bartering. In fact, one may wonder what took the authorities so long ...
- Jesper
My security clearance is so high I have to kill myself if I remember I have it...
How dare you. How fucking DARE you tax our bitcoins?
We fucking earned our fucking bitcoins by fucking mining these fucking things, and now you're going to fucking tax them? What right do you have to do this to us, you motherfuckers?
I hope the people that proposed this bit of legislation get fucking voted out of their motherfucking offices. Fucking taxes. What The Fuck. Fuck!!!!!!!!!!!
I mined these fucking bitcoins and I'm going to do what I have to do to keep the value of my money, even if it means storing my bitcoins in offshore accounts. Fuck you, Canada.
Srsly, fuck you. This is enough to make me want to join Anonymous and fight against the tyranny of my government.
It is not every transaction it is just capital gains tax. If you 'mined' BitCoins then the cost was the electricity needed to generate them. If you then sell them for money (or exchange them for goods which have a value) and get more than the cost of mining them then the government taxes you on the capital gain. This is exactly the same as any currency speculation. If BitCoins want to be treated as a real currency then there real tax rules which apply.
I made about $6500 in 2011 from bitcoins and my accountant advised me to treat it as I would any additional income. I suspect this is making things official in the sense that the CRA will start looking into past years to see if people haven't properly claimed it. In addition to claiming the $6500 as income I was able to write off a portion of my house utilities, mortgage, etc... in accordance with local bylaws.
Tax laws are enforced through audits. The government notices you have a site selling T-shirts, for example . Based on hueristics plus a random chance, they may decide to audit you. At the audit, tney examine your books, comparing what you spend versus the income you report. Maybe they notice you have a car, a 2011 Camaro. They know how much a 2011 Camaro costs, they probably see the payments on your bank statement. There had better be income reported to cover that expense. Once all of the major expenses are covered, and everything that's shown on your bank statements, and any major assets are accounted for, they know roughly what you're probably spending in cash, on small things. (People with $150,000 houses and $35,000 cars spend about $x,000 on entertainment.) It needs to all add up with the income you report.
Secondarily, someone can rat you out. Maybe ypu have a partner or employee helping you sell "Fuck Taxes" T-shirts. If things go south, the former partner or employee could alert them to the fact that you sold $xx,xxx worth of T-shirts and didn't report the income. (Tax fraud.) Maybe the employee rats you out when SHE gets audited, or maybe she's unable to hide the income from the bysiness when she's audited.
It's easier to just pay the taxes you owe.
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.
This should mean that you can start a business that is into bitcoin mining, and have your cost of doing business (Top-of-the line computers, GPU cards, etc.) deductable as a business expense.
When the copyright term is "forever minus a day", live every day like it's the last.
Now, the situation is that multinational corporations can evade tax by hiding assets in foreign companies. Bitcoin just evened out the playing field a bit. Bitcoin has the potential to be the largest tax-haven ever. But, that won't happen. Because lawmakers will strike down on tax-evasion when ordinary people are doing it. Hopefully they will see the obvious solution. Tax property and other assets that can't be moved more and income less. I believe in higher taxes on intellectual property as well. Tax trademarks, copyrights and patents harder. Don't make it so easy to cheat on the taxes. Make it hard. Because a free market is only a structure that has been set in place by government regulations and enforcement.
No special laws needed for this. If you earn $1 you pay income tax on it in most countries I'm sure. The govt doesn't care what currency you earn in. And capital gains are still capital gains, and thus taxable income, again, no matter the currency.
I've not heard anyone talking up Bitcoin as a means to evade legitimate taxes.
I used to have a better sig than this, but I got tired of it
i thought the only people who use bitcoins are those on silk road and those who gamble on SatoshiDice and other gambling sites. just saying. Didn't realize that bitcoin is so popular now. guess i'll need to catch up with news about bitcoin.
That's the nature of research and if the government didn't do it then no for-profit company that can't see past next quarter's profits is going to.
Sounds good, but in fact companies actually do most research. 3M and Dupont are largely research labs, for example. Surely you're familiar with the contributions of Xerox PARC (Palo Alto RESEARCH Center). Everybody likes to beat up on drug companies, but they spend BILLIONS on research. The best research in the world was 20th century US, when Edidon's research labs were creating awesome new stuff weekly, without any taxpayer funds.
In my experience, the difference between government R&D versus private R&D is that companies do research that might actually achieve something - a more effective lightbulb or a cure for a disease. Government researches the breeding habits of the Southern Maryland pond worm for "just because", for no apparent reason.
I've traded a few bitcoins so I looked up the local rules and the rules for currency trading is basically the same as stock trading. Nothing special, you take gains minus losses and pay capital gains tax on that. duh!? I don't see how Canada saying that normal rules for currency sales & sales of goods and services in other currencies apply to Bitcoin is "breaking news". Here's the rules which apply to Swedish people: http://www.skatteverket.se/privat/skatter/vardepapperforsakringar/utlandskvaluta/valutahandel.4.70ac421612e2a997f85800029336.html
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Taxing bitcoin purchases is about the only way we'll ever turn potheads into somewhat-contributing members of society. If this is what it takes, so be it.
To all those naively posting that this is evidence of "legitimization" of bitcoin, it should be considered that most governments also tax illegal transactions (when they can't prove it illegal by the standards of court, though they know such activity is going on, so they just prove income): it's not what is being sold or traded, but what they can define as incomes and then demand, on that basis, a cut. Never mind that they're insolvent, control that money supply, print it with interest and add it to "public" (your) debt, and so on.
Intelligent idiots are we. | Evil men do not understand justice.
So the Goverment is accepting BitCoint as an official currency - otherwise how could you pay taxes on a currency which has no official exchange o exchange rate?
Given how often bitcoins fluctuate in value, I'd be surprised if anyone could figure out how much money they owe the government. You might make a sale for $5 with of bitcoins, but by the time the transaction is concluded, only fractions of a second later, those bitcoins might actually be worth nothing or a million dollars. Also, the fact that bitcoin is anonymous kind of throws a wrench into the whole "knowing how much money people have so we can tax them" thing.
Although many posts here talk about the taxing of Bitcoins as only fair. I must play the "devil's advocate". One post says that after all, to not pay is stealing from tax paying people. I ask, Where do taxes go? Do they really go for roads and government services for the people? Or, looking at the budget, do they instead go into the pockets of those people who are always too big to fail? Sorry to burst the bubble of some, but it's the latter. Central financiers, planner, and banks will always get it first.
Does anyone in this group of postings realize that only about 52% to 55% of the federal governments income actually comes from personal income taxes? And what does personal income tax (graduated in particular) do? Income taxes eliminate much competition because they always pull money from the pockets of small businesses and those individuals who are trying (or beginning) to compete with the "big boys". When you then add in regulations that are unevenly applied and money spent on large numbers of lobbyists in congress, you have a very uneven playing fields.
The founding fathers specifically said that there was to be no personal income tax in the Constitution. They knew such things are always used for political and financial gain by those in power. That is how it is used today. And incidentally, you might want to Google about the 16th amendment for income tax. It appears that 3/4 of the legally required states did not ratify it. Does that mean I recommend not paying it? No. And I'm not a lawyer to recommend anything to anyone. In fact, to suddenly drop it (especially without making spending changes) would cause great confusion probably a sudden financial crash. I am however, in favor of an inquiry into it by the states. I wouldn't expect our president or congress to do such a thing. But the states. . . . now that might be possible. Get just enough to check it. . . .
The main reason people are looking into Bitcoins is because of a growing perception among citizens that taxes in this country are unfair and based on greed. Also, with other countries now openly raiding bank accounts, where can one stash anything of value? If the government says a particular new tax is fair, who can say it is not? I would suggest that governments steal more from the people than people could ever do by evading taxes. That is why people are looking at Bitcoins. It is an attempt to protect some of one's wealth.
One post says it would be better if we have an even bigger government. I don't know anything better to say than Ha! Ha! Ha! Ha! Government expenditures under the last two presidents have grown geometrically. There is only more waste. Bring the troops home, drop foreign aid, cut the military (not defense) budget, then gradually work on cutting welfare and finally eliminate 90% of the regulations and drop a few unnecessary and Unconstitutional agencies. Or at least do a few of those and oh yes, cut taxes. And forget worrying about the bitcoin. At that point, it won't matter to people anymore.
Congrats to the Canadian Revenue Agency. You just forced all legitimate future Bitcoin transactions in Canada to either move out of Canada or be conducted in a manner that is technically illegal. Maybe a few large companies that are based around Bitcoin will submit to taxation (are there any in Canada?), but smaller companies and average citizens will either ignore this or circumvent it. Maybe they don't expect anyone to pay up and are just covering their asses, or even discouraging Bitcoin-based businesses from setting up shop there?
This is a hacked account, for which the owner can not be held responsible.
"Barter transaction rules apply ... whatever you've received in exchange for your $1 worth of vegetables must be documented as a taxable gain of at least $1 somewhere."
Seriously? You're required by law to convert the value of bartered vegetables into dollars and then claim the total value as a gain? Is there such a thing as a law making so little sense that it's less than zero?
What about the vegetables you gave up in the transaction? Obviously both parties thought there was equal value in the trade. Assuming that the equivalent market price was $1, the deal is a wash. You gave up $1 worth of items for $1 worth of items. Where's the "gain" unless you must claim the value of vegetables you grow as "income"?
Plus, he said "AT LEAST $1" how can the "gain" possibly be more than $1?
Government is the natural habitat of ignorant, authoritarian a$$#0lez.
The problem with keeping your savings in cash under the mattress is that it is being constantly eroded by inflation (unless you meant gold or silver coins). Bitcoin is a deflationary currency and thus avoids that problem over the long term (at least in theory).
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In the first instance, you'd pay income tax on the value of the shares; in the second case you'd pay capital gains tax on the increase in value. They are taxed at different rates and not convertible, which can be a problem. Say you worked at Blackberry and received shares as income when the stock was high. The company's stock value tanks and you are laid off. You have to sell your stocks to pay your income tax bill (on the high stock value), but you have to sell the stocks for pennies on the dollar. You can record a capital loss on your stocks but capital losses can only be used to offset capital gains, not income. In short, you're screwed.
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"Barter transaction rules apply ... whatever you've received in exchange for your $1 worth of vegetables must be documented as a taxable gain of at least $1 somewhere."
Seriously? You're required by law to convert the value of bartered vegetables into dollars and then claim the total value as a gain? Is there such a thing as a law making so little sense that it's less than zero?
What about the vegetables you gave up in the transaction? Obviously both parties thought there was equal value in the trade. Assuming that the equivalent market price was $1, the deal is a wash. You gave up $1 worth of items for $1 worth of items. Where's the "gain" unless you must claim the value of vegetables you grow as "income"?
Plus, he said "AT LEAST $1" how can the "gain" possibly be more than $1?
Government is the natural habitat of ignorant, authoritarian a$$#0lez.
Government may well be the natural habitat of certain types, but getting your panties in a knot in reaction to some dude's characterization of the rules for reporting income is a bit foolish. The tax code is not any stupider for barter exchanges than it is for non barter exchanges. When you trade $1 of veggies for $1 of plumbing repairs or whatever, the tax code says that you have to treat it the same as if you had sold $1 of vegetables for $1 and then paid $1 for plumbing. You have $1 extra of income to report, and you have $1 extra expenses on your books. You are certainly allowed to deduct your vegitable-production costs from your vegitable-derrived income, and you may be able to claim that plumbing expense against income supported by your plumbing - just like if you had done it with cash.
Govt doesn't need our taxes.
Govt can print currency.
Govt imposes taxes to CONTROL the citizens.
Casteism