My friend has got different types of crypto coins. And the question he’s worried about is if there is a tax on cryptocurrency?
Tax liabilities come into effect once your friend makes transactions with cryptos. That includes selling it, exchanging it to another crypto or using it to buy stuff. Holding/keeping the cryptos does not have taxes but needs to be declared.
Everything looks good if you’re not going to sell it
Found interesting post about cryptocurrency tax
I don’t think everything surrounded crypto is clear yet, but potentially, depending on the place of the crypto, if purchased, or acquired outside of Canada, Foreign property reporting , T1135 comes into play? With the frequent fluctuation in value, annual translation gain?
Lots of discussions are happening now on that topic
That is a US article and appears to deal only with US tax - not really relevant in Canada.
“Everything looks good if you’re not going to sell it”
It sounds like your friend is planning on living forever, and never dying?
At some point there WILL be a taxable disposition, at which point he will definitely need a Professional Accountant to assist him in dealing with his portfolio of “different types of crypto coins” all with different ACBs… (or potentially cost of inventory, if he is trading for business).
In the meantime, I hope that he has very good bookkeeping skills… “The dog ate my homework” is not going to cut it when it comes time for tax reporting…
Also noted is that your reference article is about taxation in a completely different country.
Your friend probably needs advice from a Professional Accountant in the correct country, whichever that is.
Depends on how you interpret it, and we don’t have all the facts and the law is not up to us to interpret. Just for discussion purpose
Hypothetically, you buy a crypto in US, it’s digital, is the crypto considered to be delivered to Canada? or does it stay in US, but the vendor is in US. Do we need proof that it’s delivered or is the sale deemed sufficient?
Maybe using actual money, I don’t know if it’s a similar comparison, you buy US debt, in the form of a note, from a US vendor, it should be foreign investment and property?
@jeffliu you can’t use a US platform to buy cryptos in Canada. Just like the stocks platforms. Every Canadian platform in which you have an account with, is required to have your identification. Also, you need to use your bank for all the purchases/dispositions. And when you do so, CRA already have all the details. As @joe.justjoe1 indicated he needs to hire an accountant. The issue is too big to get an advice for on the internet.
That’s why I said, it’s for discussion purpose only. And if I have a bit coin personally, let say, do I have to sell it on a platform? Or can I exchange it personally? I don’t do crypto, so I can’t comment on that, but there are lots of crypto out there, only if it’s all organized like a stock exchange
Funds or intangible property situated, deposited or held outside of Canada is included in paragraph (a) of the definition of “specified foreign property” in subsection 233.3(1) of the Act. In our view, digital currency would be funds or intangible property and would be specified foreign property of a person or partnership to the extent that it is situated, deposited or held outside of Canada and not used or held exclusively in the course of carrying on an active business
But many of these Bitcoin & Crypto hoadlers who plan on holding their digital coins into eternity won’t need to worry about taxation. Although the Crypto bubble may still have a ways to go … all of these crypto currencies are eventually heading to zero.
If they can hold on long enough… they won’t need to pay any tax.
I have no doubt they will eventually be able to claim capital loss.
@snoplowguy and @benoit.associates1, you guys show that you are too far behind the times. I don’t know enough to even make those predictions. Won’t they be the new normal in a few years?
I personally feel they will all die a natural death.
Bitcoin and some of these other designer currencies are currently an inconvenience to the world’s Central Banks… perhaps the same way barter transactions might have been in the past. As soon as Bitcoin becomes an actual threat to the world’s banking system it will be eradicated quicker than you can name the fictional character Jack Robinson.
Cryptocurrencies - no value, no profit. no security except people wanting to make easy money - looks like the equivalent of a worldwide chain letter.
In other words, there is not much point in a conservative old fellow like me spending any time trying to understand cryptocurrency. I live in a world where cash and cheque are still king; friends and relatives with no plastic or e banking. Personally, I do not like cash or cheque.
Nah…of course there will be losers and winners among them at this stage but cryptos are here to stay. They will probably not be able to replace fiat money as was suggested but they definitely placed themselves as assets with stored values.
Not so sure about that. What I’ve learned (which isn’t much) is that crypto currency algorithms capture a lot more detail about each transaction. Kind of like amalgamating your accounting software with your bank statement - right now, the banks’ databases don’t include much detail about what led to each bank transaction, including the invoice, the payment details, the who, how, where, sales taxes, etc. Some crypto currencies capture all of that in every transaction. So, I don’t think crypto currencies will threaten the banks, but the banks will eventually opt to use those systems, or create their own…