Canada ONLY: Taxes and law

[spoonmang]

This is old news now but : http://news.gc.ca/web/article-en.do?nid=787789

Also, for those living in Québec, Canada : http://www.lautorite.qc.ca/en/press-releases-2014-autre.html_2014_alert-bitcoin.html

I tried reading that... it hurt my brain.

Lets say i bought 1 BTC in June of 2012 for $5, i then sold that 1 BTC in dec of 2013 for $1000.

Is that a capital gain or an income gain?

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[dunand]

Your example is a capital gain.

[spoonmang]

Your example is a capital gain.

That's what i thought.

And that's 50% of amount sold added onto your yearly income?
Or is there a bracket of its own for capital gains?

Thanks

[CoinDaddy]

Basically the Canadian Govt. has wiped their hands of Bitcoin, saying it isn't currency.
All they want is their piece if it is used to cash out or make a purchase.
So if you buy something online, they expect the appropriate taxes to be levied by the online retailer, or upon entry to the country at customs.

"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.

That section is covered in paragraphs nine through 32 of the CRA's section IT-479R, Transactions in Securities, "which provide general comments for purposes of determining whether transactions are income or capital in nature."

So if you bought $100 worth of BTC and it's currently worth $200, you don't pay anything.

However if you cashed it out at $200, THEN you would have to pay income tax on the $100 you made.

If you had taken that extra $100, and reinvested it in bitcoin, buying $200 worth of bitcoin from that initial "win" off the $100 buy-in plus the initial $100, then the value goes up to $300, then you have to pay taxes on the $100 gain.  So in the end, you pay taxes on $200 because that is how much you "made."

So, CRA only cares if you cash out, and they consider the income to be capital if you're trading and income if you're mining.
End of story... for now.
Harper and other Governments are afraid of Bitcoin.  Must be bankers whispering in their ears.

http://business.financialpost.com/2014/02/11/federal-budget-2014-puts-bitcoin-in-cross-hairs-with-new-anti-money-laundering-regulations-for-virtual-currencies/

[dunand]

Could you please explain why it is a capital gain and note income. Also, what if it was traded a few times in and out of CAD on cavirtex over that time period, as opposed to 1 purchase and 1 sale. Would the base gain in valuation of the btc be capital and the difference in gains from trading be income? Would it all still be capital or is it all now income? All in your opinion only of course. I'm currently looking for an accountant who has some understanding of btc, but want to see what people here think and how they deal with it.

If you traded several times you will need to calculate the adjusted cost base of your bitcoins on each trade to calculate the capital gain (or loss).
http://www.cra-arc.gc.ca/E/pub/tg/t4037/t4037-e.html#P1185_82580

If you are interested I made a python script to calculate the capital gain for trades on cavirtex.  https://bitcointalk.org/index.php?topic=550294

[Ann Bradshaw Byrne]

Good idea to revive this topic

[tacotime]

I will publish some simple software to calculate capital gains and income from mining soon, for both the US and Canada.  Hopefully it'll help someone, and someone will help me get bugs out of it.

[OlliBrandt80]

Canadians are so lucky with their goverment! I wish I was a citizen of Canada

[kevin1234a]

Read whole thread still having few questions:

If we trade BTC or hash power of various cloud mining with different wallets (paypal/okpay..) and never incash money from those wallets to canadian bank accounts; do we still have to declare it to CRA?
Nb: rmbr i mentioned paypal / ok pay wallets who can provide all monetary transactions to govt.

Second question if we do invest our monthly savings in btc with cavirtex does it mean that we are liable to pay tax on that invested amount ? Though govt already charged taxes before money reached to our bank accounts?

Most of the guys here they discussed about miners where hardware is involved but i didnt get much info about my queries so posting for any info

[klondike_bar]

Read whole thread still having few questions:

If we trade BTC or hash power of various cloud mining with different wallets (paypal/okpay..) and never incash money from those wallets to canadian bank accounts; do we still have to declare it to CRA?
Nb: rmbr i mentioned paypal / ok pay wallets who can provide all monetary transactions to govt.

Second question if we do invest our monthly savings in btc with cavirtex does it mean that we are liable to pay tax on that invested amount ? Though govt already charged taxes before money reached to our bank accounts?

Most of the guys here they discussed about miners where hardware is involved but i didnt get much info about my queries so posting for any info

1) you declare only when you make a sale. If you bought bitcoins in 2013 you dont have to declare then until you sell them. If you sold them in 2015, you would have to declare it on the taxes done in april 2016

2) you are taxed on your income, so yes you will be paying tax. You will pay tax a second time for your capital gains/losses when you sell those bitcoins. Its no different from cashing a paycheck THEN buying bitcoins.
*however, there may be some tax benefits in direct investing from a paycheck - you might be able to cleaim bitcoins as an investment vehicle for your TFSA

[wh00per]

http://www.duhaimelaw.com/2014/06/22/canada-implements-worlds-first-national-bitcoin-law/

Since it came after the April posts .. here it is.

I never bought coins. I only mined .. with expenses for miners, electricity etc.

How do you declare those bitcoins when you cash them out?

[zorke]

Read whole thread still having few questions:

If we trade BTC or hash power of various cloud mining with different wallets (paypal/okpay..) and never incash money from those wallets to canadian bank accounts; do we still have to declare it to CRA?
Nb: rmbr i mentioned paypal / ok pay wallets who can provide all monetary transactions to govt.

Second question if we do invest our monthly savings in btc with cavirtex does it mean that we are liable to pay tax on that invested amount ? Though govt already charged taxes before money reached to our bank accounts?

Most of the guys here they discussed about miners where hardware is involved but i didnt get much info about my queries so posting for any info

1) you declare only when you make a sale. If you bought bitcoins in 2013 you dont have to declare then until you sell them. If you sold them in 2015, you would have to declare it on the taxes done in april 2016

2) you are taxed on your income, so yes you will be paying tax. You will pay tax a second time for your capital gains/losses when you sell those bitcoins. Its no different from cashing a paycheck THEN buying bitcoins.
*however, there may be some tax benefits in direct investing from a paycheck - you might be able to cleaim bitcoins as an investment vehicle for your TFSA

I wouldn't think that the fact that you are paid in bitcoin would affect your ability to invest in bitcoin via a TFSA. I believe that you simply need to have an TFSA account set up at an institution and have the financial institution invest the money in products they offer.

The only way that I can think of to invest in this kind of tax advantaged account would be to invest in the BTC EFT when it starts trading or to invest in 2nd markets bitcoin investment trust

[kevin1234a]

1) you declare only when you make a sale. If you bought bitcoins in 2013 you dont have to declare then until you sell them. If you sold them in 2015, you would have to declare it on the taxes done in april 2016

2) you are taxed on your income, so yes you will be paying tax. You will pay tax a second time for your capital gains/losses when you sell those bitcoins. Its no different from cashing a paycheck THEN buying bitcoins.
*however, there may be some tax benefits in direct investing from a paycheck - you might be able to cleaim bitcoins as an investment vehicle for your TFSA
[/quote]

if i understood right as long as crypto remains as crypto and cloud remain at cloud we should worry about taxes unless we transfer them into any of the canadian financial institution.

Now what about the online wallets (paypal etc....) funds do we need to declare them too in tax filing?

latest article posted about the legislation of BTC and mining business is bit HEAVY!!!!

thanks guys for the info and updates

[spazzdla]

Your example is a capital gain.

That's what i thought.

And that's 50% of amount sold added onto your yearly income?
Or is there a bracket of its own for capital gains?

Thanks

I am pretty sure you are correct with 50% of it added to your total income.

So (1000 - 5) / 2 add to yearly income.

[kevin1234a]

funny question dont laugh pls 

taxes apply to the value which had been declared as unauthorized by paypal and chargedback already?

[Nhazwrath]

I read over this thread and decided to give it a poke since i didn't run across the answer i was looking in to. 

Ok so cheapo miner after a month has generated some value currently still sitting on the slush pool.   

I am aware of Canadian law dealing with capital gains.   That's what i am attempting to avoid in this cycle of what I wish to do with this value.   

Is there a Canadian investment company or bank that will accept that value without converting it to capital gains and reinvest it and eventual filter it out through my TFSA?

What I seem to have run in to is that all the banks and investment company's will not accept any outside crypto.  they Will deal with crypto if you have bought it from them or one of their ETF's that track the value but it seems to be internal only.  I totally understand why. 

so the short version of the question  external mined crypto converted to something Canadian banks/investment companies trust without having to declare capital gains as step.

[Steamtyme]

I'm a bit lost on what you are looking for.

First mining rewards are treated the same as gambling at this point not as income. The BTC you hold is subject to capital gains or losses depending on when you convert it to FIAT. One thing to note these are still grey areas, and the BTC you've mined is still in Slushpools possession. So there is a decent chance you have no capital gains as of yet, as the BTC isn't in a wallet you control.

I am not aware of anything in Canada that is offering a way to avoid the capital gains. I haven't looked to much into the funds that have popped up this year, but they seem to be a FIAT investment wit BTC holdings or something along those lines.

Good luck finding what you are looking for

[klondike_bar]

I read over this thread and decided to give it a poke since i didn't run across the answer i was looking in to. 

Ok so cheapo miner after a month has generated some value currently still sitting on the slush pool.   

I am aware of Canadian law dealing with capital gains.   That's what i am attempting to avoid in this cycle of what I wish to do with this value.   

Is there a Canadian investment company or bank that will accept that value without converting it to capital gains and reinvest it and eventual filter it out through my TFSA?

What I seem to have run in to is that all the banks and investment company's will not accept any outside crypto.  they Will deal with crypto if you have bought it from them or one of their ETF's that track the value but it seems to be internal only.  I totally understand why. 

so the short version of the question  external mined crypto converted to something Canadian banks/investment companies trust without having to declare capital gains as step.

First part: No - you couldn't use it to "load" your TFSA. However, you *might* be able to transition from BTC to a BTC-tracking equivalent (such as QBTC or GBTC) in taxed trading accounts, without triggering capital gains/losses at that time. I'm not entirely sure if this would be acceptable to the CRA though. (to my understanding, CRA will not allow you to "lock in" capital losses by selling and re-purchasing an asset - though it may work differently for capital gains?)

Second part: "newly minted" cryptos should be considered some of the "cleanest" coins possible, assuming you can demonstrate that you controlled the mining equipment at the time. I suggest keeping records and bills of sale, especially if you have a larger [5KW+] mining operation; and whether it could be construed as a business [>20kW?] and not simply a profitable hobby).