Canada Revenue Agency To Tax BitCoin Transactions 297
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."
ummm... duh (Score:4, Informative)
Capital Gains (Score:5, Informative)
Audit. Bitcoins aren't special (Score:5, Informative)
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.
Re:Capital Gains (Score:4, Informative)
Most countries (states) have a "single" tax point structure. In the non-progressive states (countries) the tax is delayed until the final customer transaction. In more progressive structures the tax is based on the value added at each stage of the chain. You buy a raw component for $1.00 you get taxed on the $1.00. You added your value and sell it for $5.00 you get taxed on the $4.00 value added. This the basic structure of VAT used inn many countries.
Therefore, the product is only "taxed" once.
Re:Kind of innevitable and entirely reasonable (Score:2, Informative)
Actually you do. If you're given or are paid in Apple shares, you're taxed the value of the shares at the time you were given them. When you sell the shares, you pay additional taxes (or receive a tax credit) based on any differences in price from when you got them.
Re:Kind of innevitable and entirely reasonable (Score:3, Informative)
As far as cap gains goes, you don't have to convert your shares into money (i.e. sell them) in order to be subjected to the tax. You would also owe it if you bartered them for something else, or if any number of other "taxable events" changing the status of the shares occurred. The rules are complicated, but basically the idea isn't "money is magically the only thing we tax", it's just "we tax it when your ownership in the property ends or changes". I'm talking about the U.S. here - I don't think Canadian law is drastically different. It's possible to tax you, say, annually on the value of changes in your property, instead of waiting for it to be disposed of in some way as we do, but that's administratively very inconvenient (not all property is easy to value), and can be pretty unfair when property has frequent large price fluctuations.
Re:Kind of innevitable and entirely reasonable (Score:5, Informative)
Yes, it's counting all levels of government added together (international comparisons typically do, because the internal structuring differs so much between countries).
If you add up all governments in the U.S. (federal, state, county, municipal), the numbers are: taxes equal 27% of GDP, and spending equals 39% of GDP. If you add up all the levels of government in Denmark, the numbers are: taxes equal 49% of GDP, and spending equals 52% of GDP. Source: The Heritage Foundation [heritage.org] (a conservative U.S. think-tank)
Doing a bit of digging for the U.S. federal budget, it looks like it's a little over half the total in both categories. Total 2012 federal tax receipts were $2.5 trillion, and total federal expenditures were $3.5 trillion. Since GDP was $15 trillion, that equates to 17% of GDP in federal taxation, and 23% of GDP in federal spending.
This applies to Sweden, too (Score:5, Informative)