Does the CRA Care About Your Digital Currency Income?
We live in a world of technology so it should not come as a surprise that some form of what some call virtual money, would eventually show up. Even if your business has not become involved in digital currency transactions as of yet you probably have heard of Bitcoins.
Naturally if the CRA thinks that there is going to be some type of loop hole affecting the financial obligations that a taxpayer has, then they are going to be on top of it pretty quick. No doubt they viewed bitcoin transactions as a potential threat to the tax coffers as they were pretty astute at setting up the rules and regulations concerning taxes and the Bitcoin industry. Where most of their interest started to surface was with the buying and selling of bitcoins as this took a big jump when a lot of people because aware of this online currency. Selling bitcoins results in the purchase price being deposited into your account, converted into traditional cash and this turns on the tax switch for the CRA’s interest.
Even though it is still new and you may think that the CRA is just being a little premature or even greedy they may not be too far off the mark of being considered as to the substantial impact this can have on a business finance level. It has been reported that a real estate agent actually got a listing on a house that was to be listed in bitcoins and even more surprising that there were potential buyers willing to buy it with this currency.
This has meant that now the CRA has to have two sets of tax rules to govern this Bitcoin currency. One set will govern the bitcoin transactions related to buying things, while the others will govern the speculative purchases and sales of the electronic currency. For those who know about bartering then the workings of this type of currency may seem familiar to you.
While you may just be getting familiar with the term bitcoins, like anything it didn’t take long before some knock offs appeared. There is now a version called Altcoins which possesses additional versions called Litecoin, Peercoin and Dogecoin.
Remember this is a virtual currency and really Bitcoin is an open sourced software, so that’s why you are seeing new virtual currency versions arrive. Bitcoins function through a network by users who are called Miners. Bitcoin transactions take place through a accounting ledger called a Blockchain. Bitcoin is an actual brand that refers to the encrypted digital tokens. These tokens have a specific value.
Remember if you are beginning to become involved in the bitcoin world even on a small scale be sure to advise your Toronto accountant about this, so he can perform the proper accounting procedures required and include these if necessary if your tax filings.