Canada to Bitcoin Miners: "Pay Yer Taxes"
April 29, 2013 10:52 AM
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Cryptocurrency is not exempt from taxation, Canadian government argues
For miners or traders who
, the digital money can be a lucrative source of real-world income. Bitcoins in theory are unregulated by any government entity and difficult to trace. But the Canadian government is looking to change that.
With Bitcoin cash value increasing five-fold to around $250 USD/Bitcoin in April, the
Canada Revenue Agency
is salivating at the prospect of extra taxes from its domestic miners/traders. The CRA says that when using Bitcoins for transactions Barter Transaction rules -- long an offline-focused rulebook -- are in effect. These rules mandate taxes on bartered goods, and Bitcoins are no exception. The g
overnment's rules state
that the value of what is received is used to determine the value of what's given up.
Paragraphs nine through 32 of the CRA's section IT-479R, Transactions in Securities
, explain that Bitcoins sold for real world money are either counted as income or capital gains.
The CRA will be hunting for Bitcoin tax dodgers for the first time.
[Sources: Bitcoin Forum (left); Nerd Merit Badges (right)]
Some Canadians are already claiming Bitcoin income on their taxes. Comments Regina currency trader Jeff Cliff in a
interview, "It's fairly anonymous system. I'm not so much into the privacy side of it, so that's why I claim it."
Others feel the government should keep their hands off Bitcoins. But Canadians who think the CRA is treating Bitcoin earnings or barter as an "honor system" may be in for a rude surprise. The CRA told the
that it will be watching for unreported Bitcoin revenue this year.
The CRA will reportedly crack down on unreported Bitcoin revenue. [Image Source: The CP]
Saskatoon realtor Paul Chavady who has taken the unusual step of allowing buyers to use Bitcoins, explains how this could work, commenting, "When you sell [the BitCoins], they will deposit that in your account. As soon as it turns into Canadian dollars, it's back in the eyes of the CRA and everybody else. If you get a big deposit of $10,000, or $100,000, [CRA is] going to say, 'Hey, where did that come from?'"
In other words don't count on cryptography to protect you if you cash out your Bitcoin wealth for real world purchases; the (Canadian) tax man knows better.
This article is over a month old, voting and posting comments is disabled
4/29/2013 11:01:56 AM
So now all those tax dodgers will just make a bank account in another country. Now Canadian banks actually have less reserves to work with lol.
RE: lol ok
4/29/2013 11:31:15 AM
With all the recent reports of wealthy Canadian not paying taxes do to offshore accounts.
I would think this is a higher priority then taxing bit coin earns which would be a drop in the bucket compared to other issue.
RE: lol ok
4/29/2013 11:47:51 AM
International banking secrecy is in retreat globally. The US has been using the threat of a ban-hammer for access to the us financial system against anyone who doesn't cooperate to roll back layers of tax avoidance and money laundering cloaking globally. Sketchy offshores will probably continue in some form for a while; but Austria's becoming increasingly isolated among first world nations in its rearguard fight to protect financial anonymity. (Guaranteed in their constitution, but expected to be breached following an election later this year.)
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