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Canada Revenue Agency To Tax BitCoin Transactions

samzenpus posted about a year and a half ago | from the show-me-the-money dept.

Canada 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."

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In other news (0, Offtopic)

stinkywob (2909493) | about a year and a half ago | (#43575439)

Canada has levied a large tax on professional developer tools. While Visual Studio was among the first to get taxed, no open source development tools were included as none was examined to be of "professional" level.

Re:In other news (1)

Anonymous Coward | about a year and a half ago | (#43575971)

A 100% tax on a product that costs 0 dollars is a tax of 0 dollars. No point in taxing something free.

Kind of innevitable and entirely reasonable (5, Insightful)

sg_oneill (159032) | about a year and a half ago | (#43575441)

All seems reasonable to me. Our civil society is founded on the fact that since the government actually costs money, then people need to pay tax. Trying to hide money in bitcoin ought be seen as tax evasion, unless they are paying taxes on that money.

Libertarian types trying to sponge off the taxes of hard working tax payers via tax evasion need to stop being so greedy and stealing other peoples money.

Re:Kind of innevitable and entirely reasonable (5, Insightful)

synaptik (125) | about a year and a half ago | (#43575479)

I haven't heard any libertarians espousing bitcoin as a means of evading taxes. I just sold mine from 2010, and I am well aware of the need to pay income tax on the net proceeds. Just like anything else.

Re:Kind of innevitable and entirely reasonable (-1)

Anonymous Coward | about a year and a half ago | (#43575547)

I haven't heard any libertarians espousing bitcoin as a means of evading taxes. I just sold mine from 2010, and I am well aware of the need to pay income tax on the net proceeds. Just like anything else.

I have. though maybe they're not libertarians as much as deadbeats, the context being to hide your wealth into bitcoins so you can get social security.

Of course, they could have just had cash under the mattress. But that doesn't have the same cyber-screw the man aspect so they'll feel less like leet hax0rs if they just have the money as cash. With those guys it was largely hypothetical since they were unlikely to have any cash to hide any time soon though. which gets us to how majority of vocal bitcoin advocates being guys who have neither hard currency nor bitcoins!

Re:Kind of innevitable and entirely reasonable (3, Interesting)

Cederic (9623) | about a year and a half ago | (#43575905)

Income tax? Or Capital Gains tax?

I guess it depends whether you bought them or 'mined' them.

Re:Kind of innevitable and entirely reasonable (1)

synaptik (125) | about a year and a half ago | (#43576119)

Yep, capital gains, sorry. :) I was speaking loosely. I'd have gotten in right on my Schedule D.

Re:Kind of innevitable and entirely reasonable (0)

TheRealMindChild (743925) | about a year and a half ago | (#43576025)

Except, it is capital gains tax, not income tax. Being so sure that you know what you are doing, perhaps maybe you should hit the books again

Re:Kind of innevitable and entirely reasonable (1)

synaptik (125) | about a year and a half ago | (#43576121)

Yes, capital gains, sorry. :) I was speaking loosely. I'd have gotten it right on my Schedule D, come tax time.

Re:Kind of innevitable and entirely reasonable (0)

Anonymous Coward | about a year and a half ago | (#43575507)

I'll go along with it if I can PAY my taxes in bitcoin...Until then @!#$@#$ off.

Re:Kind of innevitable and entirely reasonable (4, Insightful)

gl4ss (559668) | about a year and a half ago | (#43575551)

I'll go along with it if I can PAY my taxes in bitcoin...Until then @!#$@#$ off.

well you probably can't pay your taxes in apple shares either.

Re:Kind of innevitable and entirely reasonable (2)

SJHillman (1966756) | about a year and a half ago | (#43575911)

If I'm not mistaken, you're also not taxed on Apple shares until you turn them back into real-world money via dividends or selling your shares.

Re:Kind of innevitable and entirely reasonable (1)

fredprado (2569351) | about a year and a half ago | (#43576001)

As it happens with bitcoins everywhere but in Canada now, apparently.

Re:Kind of innevitable and entirely reasonable (2, Informative)

Anonymous Coward | about a year and a half ago | (#43576097)

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 (0)

Anonymous Coward | about a year and a half ago | (#43575939)

I'll go along with it if I can PAY my taxes in bitcoin...Until then @!#$@#$ off.

well you probably can't pay your taxes in apple shares either.

Err, you don't pay taxes on Apple shares either. You pay capital gains taxes on the money extracted when said shares are sold (through whatever valid accounting method).

The only situation you would is if the shares were given as compensation or a gift, otherwise you must have invested already taxed earnings in the first place.

Re:Kind of innevitable and entirely reasonable (0)

Anonymous Coward | about a year and a half ago | (#43575967)

well you probably can't pay your taxes in apple shares either.

Not sure if you're saying that bitcoin is not a currency or that you can only pay taxes with a country's standard currency or both. I liked your response in any case. Bitcoin makes a lot more sense to me when viewed as a tradeable commodity like pork bellies.

Re:Kind of innevitable and entirely reasonable (1)

fredprado (2569351) | about a year and a half ago | (#43576019)

The differences between a current and a tradeable commodity (especially virtual tradeable commodities) are not so clear anymore these days, and tend to get even more cloudy as time passes.

Re:Kind of innevitable and entirely reasonable (-1)

Anonymous Coward | about a year and a half ago | (#43575513)

Get a grip, right wing extremists like you need to learn a little about currency, what is does, where it comes from, and how you trade.

Re:Kind of innevitable and entirely reasonable (5, Insightful)

olip85 (1770514) | about a year and a half ago | (#43575527)

Good move by the government, and it is a good thing that this is happening sooner rather than later. Yes, taxes suck, yes I want to pay lower taxes, etc, but roads and healthcare don't pay for themselves.

Re:Kind of innevitable and entirely reasonable (0)

Anonymous Coward | about a year and a half ago | (#43575603)

Here in the US, the roads and healthcare, just like everything else, are paid for by going further into debt. Federal taxes and the % levels they're set at today are mainly about reinforcing social classes.

Re:Kind of innevitable and entirely reasonable (1)

amiga3D (567632) | about a year and a half ago | (#43575677)

Have to buy those votes somehow.

Re:Kind of innevitable and entirely reasonable (0)

dryeo (100693) | about a year and a half ago | (#43575891)

Here in the US, the roads and healthcare, just like everything else, are paid for by going further into debt. Federal taxes and the % levels they're set at today are mainly about reinforcing social classes.

Yea, we have a right wing government currently, same thing, into debt why they scream how they're fiscally conservative. (http://www.politicalcompass.org/test puts both Harper and Obama far to the right except Obama isn't as statist compared to Harper, who by the way also promised transparency in government and makes Obama look very open).
The Conservatives are also cutting Revenue Canada's budget way back while promising to go after offshore tax evaders.

Re:Kind of innevitable and entirely reasonable (0)

Anonymous Coward | about a year and a half ago | (#43575533)

Trying to hide money in bitcoin ought be seen as tax evasion

Why? If the government said that some things aren't taxed and you use those things to reduce your taxes, how is that *your* fault and not the government's fault?

Re:Kind of innevitable and entirely reasonable (0, Troll)

roman_mir (125474) | about a year and a half ago | (#43575569)

Quite the opposite is the case, if there was no way to escape government taxes, if there were no tax havens, if there was no way to move money offshore, where government could not put its hands on it, then all taxes would be much higher.

You are under the wrong impression that government just needs that specific money to operate and if you give it that specific money then government will be satisfied and will do what you think it should do.

Nothing is further from the truth, the truth is that government is a way to extract money from the real economy. Every government worker exists only as a parasite appendage to the real economy, and the more the parasite can extract from the real economy the more it will extract.

All the competition among different tax jurisdictions, and yes, among currencies and different types of money prevent government from attempting to take away all of your money. It is a good thing for the Californians that Texas exists (in the context of States within USA itself) and it's a good thing that offshore tax havens exist, it's a good thing that there are other countries with their own banking systems, it's a good thing that there are competing currencies, including Bitcoin, it's because if there was no Texas and no other countries and no offshore zones and no Bitcoin, etc., the taxes would always go up, government spending would always go up, of-course there is a breaking point, when people stop working above table and go underground into black markets (which exist today and also act as competitive markets to the rigged official economies).

CRA is pro-active, not willing to leave a stone unturned, but they are not going to succeed in this case, many transactions will benefit from the pseudo-anonymity that Bitcoins provide, somewhat similar to anonymity that cash provides, and it's a good thing that the government cannot and will not be able to tax everything.

Re:Kind of innevitable and entirely reasonable (1)

Anonymous Coward | about a year and a half ago | (#43575699)

Tell me how a air traffic controller or a teacher, to use two examples a "parasite appendage to the real economy"? All are not strictly needed, but the economy would be much smaller if planes would crash into each other, or if people didn't learn to read and write so they could contribute more to the economy.

The idea that what the government does only extract money from the economy. Without the government the economy would be much much smaller.

Take away all the roads that are maintained by the government and see how the economy do. There are lots of bad things that the government does, but not everything is parasitic.

Re: Kind of innevitable and entirely reasonable (1, Funny)

Anonymous Coward | about a year and a half ago | (#43575795)

But but the free market will fix everything.

Re:Kind of innevitable and entirely reasonable (-1)

Anonymous Coward | about a year and a half ago | (#43575735)

Well, that went from +2 Interesting to -1 Troll in a heartbeat.

CRA and other government 'workers' in the house?

Re:Kind of innevitable and entirely reasonable (1)

paiute (550198) | about a year and a half ago | (#43575805)

Let me guess. You get to define what belongs in the "real" economy. Is it full of true Scotmen?

Re:Kind of innevitable and entirely reasonable (-1)

roman_mir (125474) | about a year and a half ago | (#43575893)

Real economy is the producing economy, economy that produces products and services, economy that allocates resources according to the overall emerging direction of the market.

You should watch this [youtube.com] before you come back with other questions to me.

Re:Kind of innevitable and entirely reasonable (2, Insightful)

spire3661 (1038968) | about a year and a half ago | (#43575571)

Please expain to me why the government should get a cut if i transfer money from one human to another. Its insanity to expect a cut from EVERY FINANCIAL transaction. This level of taxation goes FAR BEYOND what it takes to run a nation.

Capital Gains (4, Informative)

Roger W Moore (538166) | about a year and a half ago | (#43575667)

It is not every transaction it is just capital gains tax. If you 'mined' BitCoins then the cost was the electricity needed to generate them. If you then sell them for money (or exchange them for goods which have a value) and get more than the cost of mining them then the government taxes you on the capital gain. This is exactly the same as any currency speculation. If BitCoins want to be treated as a real currency then there real tax rules which apply.

Re:Capital Gains (1, Interesting)

LordLimecat (1103839) | about a year and a half ago | (#43575861)

It was taxed when the power company purchased the equipment and fuel to make the electricity, and again when you purchased the electricity from the power company, and again when you converted it into bitcoins, and again when you purchased some milk with it, and again when the shopkeeper paid his employees with the milk money.

Its "consistent" for sure, but its ridiculous as well. GP is right, the idea that somehow the Government needs a cut of every transaction (rather than just income tax) is absurd.

Re:Capital Gains (4, Informative)

Anonymous Coward | about a year and a half ago | (#43576035)

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 (0, Redundant)

roman_mir (125474) | about a year and a half ago | (#43575691)

The fact is that American government is about 80 times the size that it should be, Canadian government is probably 60 times the size that it should be, basically those government should be cut to about 2-4% of their current size and the economies would strive.

But this also means disassembling the existing welfare [youtube.com] state (I mean completely dismantling it, kicking people off their government pensions, off government provided health care, shutting down all gov't 'insured' loans, getting rid of public education, public transit, public utilities, public everything.

BTW, for those who don't know it, USA is the LARGEST tax haven in the world. That's right, USA will not collect taxes for foreign governments on money that belongs to foreigners in USA and that is made in USA (capital gains, dividends, etc.) If CRA wants to tax Canadian Bitcoin savers, Canadians can just use USA exchanges.

Re:Kind of innevitable and entirely reasonable (4, Interesting)

Trepidity (597) | about a year and a half ago | (#43575855)

Sounds pretty silly. I moved from the USA to Denmark and things work much better here. You know why? Because the government is twice as big, not smaller. So infrastructure is actually built and maintained, healthcare coverage is universal, education is strong, the unemployed get skills retraining, etc., etc.

Re:Kind of innevitable and entirely reasonable (2, Interesting)

roman_mir (125474) | about a year and a half ago | (#43575933)

Because the government is twice as big, not smaller.

- you are mistaken, you don't know where you are.

Denmark has a trade surplus, not a 50 Billion / month trade deficit. Denmark has a tiny debt compared to its GNP, USA is in a hole that it can't get out of.

You are mistaken that Denmark has a larger government, Denmark has a much smaller government, insignificant by USA standard. Denmark is not fighting wars around the globe, by the way, it doesn't have about 85 or so MILLION unemployed people that could work if it weren't for a huge welfare state.

You should watch something [youtube.com] before you come back with other comments.

Re:Kind of innevitable and entirely reasonable (5, Interesting)

Trepidity (597) | about a year and a half ago | (#43575947)

It has a larger government measured by percentage of GDP: government spending equals 50% of GDP. It's true that it has lower debt, because it also has much higher taxes (around 50% of GDP as well), so it pays for its spending rather than selling bonds to pay for it.

Re:Kind of innevitable and entirely reasonable (0, Troll)

roman_mir (125474) | about a year and a half ago | (#43576007)

Again, you are mistaken, you don't know where you came from and where you are.

USA has a tax that is over 50% on those who actually pay taxes, and those who do not are getting a subsidy that grows the debt and thus the inflation (money printing), which is what is destroying the US economy in the first place. As a percentage of GDP USA government is spending much more than Denmark, because real GDP in USA is not the number that is given to you. That number includes things that have nothing to do with production, that number is absolutely irrelevant and you can't rely on it for anything. Real GDP in USA has been shrinking for over 2 decades now, USA government spends about twice as much money as it collects in revenues and it prints the difference (Fed is not a private bank, it's a government monopoly on fake credit).

Comparing an actual productive output of a country to a made up number is nonsensical, the only thing that should be looked at when all other numbers are nonsense is the trade deficit or surplus, USA has a deficit of 50 Billion a month, Denmark has a surplus, which it uses to pay down its debt (if it didn't finish paying it down yet), so at least in Denmark the taxes are going towards PAYING THE DEBT.

In USA the taxes and all the debt and inflation go toward growing the government.

Re:Kind of innevitable and entirely reasonable (0)

Anonymous Coward | about a year and a half ago | (#43576143)

And once again, you address none of his points...

Denmark spends more per as a percentage of GDP than the USA. I know that it doesn't fit what you WANT to be true, but it turns out reality isn't subject to your fantasy.

Re:Kind of innevitable and entirely reasonable (-1)

roman_mir (125474) | about a year and a half ago | (#43576155)

Denmark spends more per as a percentage of GDP than the USA. I know that it doesn't fit what you WANT to be true, but it turns out reality isn't subject to your fantasy.

- I take it you slept through the part of the comment that addressed the fact that Denmark is using the tax revenue to pay down its debt.

Your argument is nonsense, Denmark is using the revenues to pay down the debt, not to increase government spending. Government spending in Denmark is lowest in decades.

Re:Kind of innevitable and entirely reasonable (4, Insightful)

Jawnn (445279) | about a year and a half ago | (#43575763)

This level of taxation goes FAR BEYOND what it takes to run a nation.

[citation needed]
First of all, there is precious little agreement on how much it actually takes to "run a nation", but in the case of the U.S., it is plain to even the most dim-witted that we are not collecting enough to cover that expense. Unless/until we can agree to spend less, more revenue is required. To suggest that it is excessive is to deny reality.

Re:Kind of innevitable and entirely reasonable (2)

ganjadude (952775) | about a year and a half ago | (#43575867)

the issue is not "covering the expense" it is deciding which expenses need to be cut. Our economy brings in more in each year then we spent per year only a decades ago. there is no excuse that spending levels have gone up to trillion dollar deficits when we still take in more money than only a decade ago. Let me ask you something. has anything gotten better for the rising taxes and government spending? Some will argue for others against of course. I argue that we dont get nearly as much for what our government spends vs 10 years ago. Even if we got the exact same that we got 10 years ago from our tax money, there is no reason for spending to have gone up.

somewhere along the line the federal government forgot all about the 10th amendment.

Re:Kind of innevitable and entirely reasonable (3, Insightful)

spyfrog (552673) | about a year and a half ago | (#43576093)

I thought you were an democracy. So it isn't the federal government who is to blame - it is you the people that continue to vote in people who either doesn't lower spending or raises taxes to balance the budget.
Blaming it on the federal government is plainly wrong - you Americans simply wants to eat the cookie and keep it. Balancing a budget is easy - either you cut spendings or your raises taxes. Your politicians does neither and you keep voting on them so you should all take the blame.

Re:Kind of innevitable and entirely reasonable (2)

fastest fascist (1086001) | about a year and a half ago | (#43576017)

The title is misleading. Bitcoin transactions aren't being taxed, as far as I can tell. Sales denominated in bitcoins are subject to VAT (or similar), and government-currency-denominated gains from selling bitcoins for other currency will be taxed. Sending bitcoins from one wallet to another isn't, per se, subject to tax. As far as I can tell.

Re:Kind of innevitable and entirely reasonable (0)

Anonymous Coward | about a year and a half ago | (#43575591)

It is inevitable; it is certainly not reasonable.

Our not-so-civil society is in direct opposition to government action, including taxation. Society is that which is chosen, the mutual, peaceful, voluntary, collaboration between fellow human beings. Government is the idea that an institution has the moral privilege to initiate violence within some geographical region to achieve its ends.

So 'government costs money' is not what our society is founded upon; indeed, it is what disrupts society. Your stockholm syndrome attack on your fellow man for avoiding theft is glaringly obvious. You choose to internalize the abuse of authority to lessen its pain by siding with the abusers against those who try to avoid theft. You even go as far as to say it is the victims of theft that are the ones guilty of stealing... madness.

Re:Kind of innevitable and entirely reasonable (1)

siride (974284) | about a year and a half ago | (#43575613)

People aren't going to agree, and there will be enforcement in that case, be it from the government or some private army or posse of vigilantes. Personally, I'd rather have a republican government having a monopoly on enforcement than a multitude of private forces. We've had periods in history like that and usually they result in a lot of violence and social disorder.

Re:Kind of innevitable and entirely reasonable (-1)

Anonymous Coward | about a year and a half ago | (#43575621)

So why do we need government again, in this modern age of electronic consensus building? When a properly designed system could provide direct democracy, when technological advances are providing the ability to produce local power and relocalised industry, when new materials offer the promise of extremely durable roads, bridges and other infrastructure, and the very future of work itself is in question as robotics, AI and nanomaterials are on the horizon....

Question the need for the parasite itself, don't bicker about its proper feeding schedule!

Re:Kind of innevitable and entirely reasonable (4, Insightful)

dskoll (99328) | about a year and a half ago | (#43576055)

So why do we need government again?

Because countries without governments tend to resemble Somalia, Afghanistan, Iraq and so on.

When a properly designed system could provide direct democracy

Right, because we all know how well e-voting works.

I think that those who favour no government and those who favour large intrusive governments should get to live in Somalia and North Korea, respectively, just to see where their extreme positions lead.

Re:Kind of innevitable and entirely reasonable (2)

maxwell demon (590494) | about a year and a half ago | (#43576063)

If you don't like living under a government, you are free to move to Somalia. However I don't think you'll like the government-free life there ...

Note that Switzerland is a direct democracy, yet still has a government. Why would they have one if direct democracy made it superfluous?

And if all the work is done by robots, a government is needed more than ever, because then there will be no more economic wealth redistribution through wages.

Re:Kind of innevitable and entirely reasonable (4, Insightful)

Solandri (704621) | about a year and a half ago | (#43575701)

Libertarian types trying to sponge off the taxes of hard working tax payers via tax evasion need to stop being so greedy and stealing other peoples money.

It all depends on efficiency.

- If the tax money collected by the government is spent on a program which yields a higher return (by increasing the nation's productivity) than if the money had remained in private hands, then tax evasion is stealing from other taxpayers.

- OTOH if the government is spending money on programs which aren't more efficient than private use (or are even losing money), then tax evasion actually helps the economy (in totalitarian states, it leads to black markets) and it's the government which is being greedy and stealing people's money.

There's a tendency for libertarians to pretend only the second state exists, and for big-government proponents to pretend only the first state is possible. The reality is that either state is possible. We have to be constantly vigilant to appraise the effectiveness of government programs, and not afraid to cut the ones which become wasteful. But likewise, neither should we immediately dismiss all government programs as wasteful.

Re:Kind of innevitable and entirely reasonable (3, Insightful)

AuMatar (183847) | about a year and a half ago | (#43575783)

There's also programs that may be inefficient or cost money that society decides are worth paying for anyway. Not everything needs to be about making a profit. Those programs should still be watched to ensure that are as efficient as possible, but they shouldn't necessarily be killed. Social Security is an example of that- there's no financial gains for keeping old people alive and sheltered, but its something society decides is a good idea.

Re:Kind of innevitable and entirely reasonable (1)

omglolbah (731566) | about a year and a half ago | (#43575885)

That isnt really the argument though as I read it.

If a government program run by a public entity does X amount of work at the cost of 1 million dollars...

And a private entity can do the exact same amount of X for 0.9 million dollars.. The argument is to let the private entity handle the work.

This also goes the other way though and sometimes it is much less costly to have a public entity handle something compared to having it privatized.

Fire protection services, various welfare programs and the likes.

Re:Kind of innevitable and entirely reasonable (1)

AmiMoJo (196126) | about a year and a half ago | (#43575945)

Problem is that things like treating sick people instead of letting them die in the street isn't a very efficient use of money. A private company that doesn't give a shit about human suffering could generate more profit with that cash.

It is also rather hard to determine what is efficient when the pay-back on some things can take decades to arrive. The government often funds basic research that takes 10-20 years before any company becomes interested in and commercializes it, and sometimes it fails completely. That's the nature of research and if the government didn't do it then no for-profit company that can't see past next quarter's profits is going to.

One of the most important functions of government is to do things that are not profitable but which we as a society deem worth doing anyway. Applying commercial efficiency measurements to it is stupid.

Re:Kind of innevitable and entirely reasonable (-1)

Anonymous Coward | about a year and a half ago | (#43575907)

Libertarian types trying to sponge off the taxes of hard working tax payers via tax evasion need to stop being so greedy and stealing other peoples money.

That's hilarious, calling us sponges when you're the piece of shit that's trying to take money from productive people and feed it to a bunch of nigger babies that are just going to grow up, steal property, shoot white kids and make even more nigger babies to repeat the cycle. Go fuck yourself up the ass with a knife, blade first.

Re:Kind of innevitable and entirely reasonable (0)

Anonymous Coward | about a year and a half ago | (#43575981)

Bitcoin gains are already taxable. What they are proposing is yet another tax... not very reasonable. Canada always does dumbshit like this, they were taxing CD-R's and media because you could potentially copy something copyrighted.

Re:Kind of innevitable and entirely reasonable (1)

quickcup (2896097) | about a year and a half ago | (#43576031)

You are the one who is greedy demanding that others pay for you.

Re:Kind of innevitable and entirely reasonable (1)

hairyfeet (841228) | about a year and a half ago | (#43576075)

Well this probably shouldn't be taxed until its turned into something tangible or should be treated like capital gains in that you don't pay until you cash out. I mean we don't tax the virtual armor in MMOs, even though people actually pay real money for that shit, so I don't see why bitcoins should be treated any differently. At the end of the day its really just this virtual thing that really only has value because some people believe in it,, again we have seen people pay crazy prices for virtual crap because they believe in that but we don't tax it.

Of course sadly what is gonna end up happening is virtual crap will end up getting taxed too because god fucking forbid there be a single thing in the universe the government doesn't get a cut of, no matter how real or unreal the thing is. I just don't see how bitcoin should be considered any better or more special than WoW gold or any other unreal thing people are willing to buy, if they trade the unreal thing for real money? I suppose you could tax it then but I'd argue you are already taxing them when they spend the real money but at least that would make sense, treating BC any differently than WoW gold or horse armor just doesn't make any sense to me...hell we've seen idiots pay money for low UID account on Slashdot on eBay, does that mean the government should have a "low UID tax" since you could theoretically get some money for it?

Tax burden (0)

Anonymous Coward | about a year and a half ago | (#43576161)

Now, the situation is that multinational corporations can evade tax by hiding assets in foreign companies. Bitcoin just evened out the playing field a bit. Bitcoin has the potential to be the largest tax-haven ever. But, that won't happen. Because lawmakers will strike down on tax-evasion when ordinary people are doing it. Hopefully they will see the obvious solution. Tax property and other assets that can't be moved more and income less. I believe in higher taxes on intellectual property as well. Tax trademarks, copyrights and patents harder. Don't make it so easy to cheat on the taxes. Make it hard. Because a free market is only a structure that has been set in place by government regulations and enforcement.

Dear CRA... (-1)

Anonymous Coward | about a year and a half ago | (#43575461)

Go Fuck yourself.

Signed: A concerned Canadian Citizen.

Re:Dear CRA... (1)

sg_oneill (159032) | about a year and a half ago | (#43575477)

Yes clearly Canadas population will be angry that tax evaders will be made to contribute to the resources of other people that they consume without paying.

Re:Dear CRA... (0)

tompaulco (629533) | about a year and a half ago | (#43575669)

Yes, because every Bitcoin transaction is someone trying to evade taxes.
Still, it's nice to know that they finished cracking down on all those filthy freeloaders using CAD$ for private untraxed transactions.

LOL (2)

intellitech (1912116) | about a year and a half ago | (#43575469)

And how exactly do they plan to accomplish this? Technical explanation required.

Re:LOL (1)

QuasiSteve (2042606) | about a year and a half ago | (#43575499)

Perhaps they'll make the exchanges report...exchanges.

Then exchanges will move offshore, and the governments will deem them illegal - kind of like gambling. So you'll have your BTC, but you'll have a hard time getting that turned into $CAD. 'Hard' being relative in the internet age, of course - it's not that hard to do online gambling in the U.S., and the Dutch tend to have zero problems accessing TPB despite ever-updating IP blocks.

To be honest, though, it isn't that much different from U.S. states in which you technically should report out-of-state purchases and pay taxes on it, and most people simply do not - then come complaining when the tax man finds out directly, or decides that places like Amazon should just collect the tax for them. I.e. complaining about what is essentially tax evasion.. it just happens to be a very popular form of tax evasion.

Re:LOL (0)

Anonymous Coward | about a year and a half ago | (#43575539)

it just happens to be a very popular form of tax evasion.

Normal sales taxes are usually done automatically. Having to report out-of-state purchases and then paying sales taxes is too much work for the average person, or they simply forget (and it's nice to not pay as much too, of course).

Re:LOL (1)

YodasEvilTwin (2014446) | about a year and a half ago | (#43575515)

Just like cash, they can't tell if you give your friend a few coins in return for something. But any company in the business of providing goods and services had better have their books in order. (Even drug dealers pay their taxes if they're smart -- too much attention on them otherwise.) They are going to tax volume sellers and cover the majority of transactions that way. Your piddling little trade doesn't factor into the grand scheme of things.

Re:LOL (1)

ColdWetDog (752185) | about a year and a half ago | (#43575709)

(Even drug dealers pay their taxes if they're smart -- too much attention on them otherwise.)

I would be interested in knowing best practices in this case.

Do you pay an import duty on your Colombian cocaine? Sales tax in the purchaser's city? Do you get addresses of your customers? VAT in Europe?

Fascinating idea.

Re:LOL (1)

misexistentialist (1537887) | about a year and a half ago | (#43575851)

I think the idea is to make the income appear to have come from legal sources, which might indeed incur the taxes you mention. But of course the government invents the crime of "laundering" so that it can grab all of it

Re:LOL (1)

ganjadude (952775) | about a year and a half ago | (#43575895)

usually they have a front store, something that is mostly cash transactions, hot dog trucks, dry cleaning businesses etc..... or so I am told.....

Audit. Bitcoins aren't special (4, Informative)

raymorris (2726007) | about a year and a half ago | (#43575725)

Tax laws are enforced through audits. The government notices you have a site selling T-shirts, for example . Based on hueristics plus a random chance, they may decide to audit you. At the audit, tney examine your books, comparing what you spend versus the income you report. Maybe they notice you have a car, a 2011 Camaro. They know how much a 2011 Camaro costs, they probably see the payments on your bank statement. There had better be income reported to cover that expense. Once all of the major expenses are covered, and everything that's shown on your bank statements, and any major assets are accounted for, they know roughly what you're probably spending in cash, on small things. (People with $150,000 houses and $35,000 cars spend about $x,000 on entertainment.) It needs to all add up with the income you report.

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:LOL (1)

squiggleslash (241428) | about a year and a half ago | (#43575961)

Same way they tax companies that only engage in cash transactions.

It's not hard. Yes, there are opportunities for fraud, but when one company says it paid 1,000,000 bitcoins for a PC, and the selling company says it sold the PC to the first company for 10 bitcoins, then one or the other company has submitted a fraudulent tax return, and the truth will come out once both are investigated.

Okay (0)

fustakrakich (1673220) | about a year and a half ago | (#43575493)

Then the government must accept Bitcoins as payment for all services..

Re:Okay (1)

maxwell demon (590494) | about a year and a half ago | (#43575549)

Why? Could you avoid the duty of paying taxes by just buying in US Dollars instead of Canadian Dollars? Or does the Canadian tax office accept US Dollars for tax payment?

Re:Okay (1)

maxwell demon (590494) | about a year and a half ago | (#43575553)

Oops, that of course should have been "selling", not "buying". I was too quick on the submit button.

Re: Okay (2)

Literaphile (927079) | about a year and a half ago | (#43575607)

That doesn't make sense. You are taxed on any gains when you sell shares of a company - does this mean that you should be able to pay your taxes with stocks?

Re:Okay (1)

SplatMan_DK (1035528) | about a year and a half ago | (#43575629)

LOL ... ahemm ... no?

All sort of things which are not accepted as payment are taxed. Things like financial bonds and potatoes for example - they are taxed in different ways, but not accepted as "payment" anywhere.

[Item eligeble for collecting taxes] != [valid currency for payment]

- Jesper

ummm... duh (4, Informative)

larry bagina (561269) | about a year and a half ago | (#43575495)

Can't speak for Canada's tax laws but that's entirely consistent with US tax law. Capitol gains are taxable. Bartering is taxable. The only news is that by specifically naming bitcoin they're further legitimizing it.

Re:ummm... duh (1)

maxwell demon (590494) | about a year and a half ago | (#43575559)

Does it? If I buy from you, but pay with illegal drugs, am I exempt from taxes? If not, does it legalize illegal drugs?

Re:ummm... duh (1)

maxwell demon (590494) | about a year and a half ago | (#43575565)

Oops, that should have been an answer to this [slashdot.org] post.

Re:ummm... duh (1)

TeknoHog (164938) | about a year and a half ago | (#43575581)

Dude, I reckon that was a perfectly legitimate reply to the OP's sig.

Re:ummm... duh (0)

Anonymous Coward | about a year and a half ago | (#43575601)

Not. Even. Remotely related.

Re:ummm... duh (1)

maxwell demon (590494) | about a year and a half ago | (#43575687)

Not. Even. Remotely related.

You've seen my self-reply where I've explicitly stated that I accidentally replied to the wrong post?

Re:ummm... duh (0)

Anonymous Coward | about a year and a half ago | (#43575745)

By the IRS's rules: You're not exempt from taxes, nor is the person you buy it from, and no it doesn't mean it's legal, it just means illegal income gets taxed too.

Re:ummm... duh (0)

Anonymous Coward | about a year and a half ago | (#43575801)

One of the first tax issues litigated in Canada was whether or not gains from illegal activities were taxable. In short, they are:

Smith v Attorney General of Canada 1924 Ex. CR 193

"This is not a case with a meritorius quality commending itself to a court of justice. The appellant invokes his own turpitude to claim immunity from paying taxes and to be placed in a better position than if he were an honest and legal trader, and asks the court to discriminate in his favour as against other honest traders. As against an innocent taxpayer no man shall set up his own iniquity to operate such discrimination in his favour. His claim rests upon and is tainted with illegality and no court will lend its aid to a person who rests his case on an illegal act."

In modern times you will frequently see the CRA going after drug dealers and others of their ilk for unreported income and for a failure to collect sales tax on their drugs.

A more interesting question is whether or not the business expenses of an illegal business can be deducted under the income tax. For the most part they can be (although there are exceptions for bribes and illegal payments).

Good for bitcoin (4, Insightful)

vasanth (908280) | about a year and a half ago | (#43575497)

good in the sense it is gaining legitimacy..

This will make electronic currencies more accepted (0)

Anonymous Coward | about a year and a half ago | (#43575501)

Electronic currencies are the cash of the future, if the government views them as legitimate it will be easier to convince retailers to do as well.

Re:This will make electronic currencies more accep (0)

Anonymous Coward | about a year and a half ago | (#43575585)

Electronic currencies are the cash of the future, if the government views them as legitimate it will be easier to convince retailers to do as well.

You mean things like dollars and Euros?

You know - get paid directly into a bank account, pay for things with electronic transactions?

Back to beaver pelts and buckets of syrup... (0)

Anonymous Coward | about a year and a half ago | (#43575541)

Back to trading in beaver pelts and buckets of maple syrup eh?

Re:Back to beaver pelts and buckets of syrup... (1)

Anonymous Coward | about a year and a half ago | (#43576073)

Back to trading in beaver pelts and buckets of maple syrup eh?

Get enough and you can live in a hoose.

Hard core Bitcoin adopters (1)

MLBs (2637825) | about a year and a half ago | (#43575567)

Can they pay the tax with Bitcoin?

Re:Hard core Bitcoin adopters (1)

Anonymous Coward | about a year and a half ago | (#43575715)

Nope; the Canadian Dollar is the legal currency of Canada, and that's what the tax is in. The tax is not for bitcoin as currency per se, but as bartering tool or a commodity. The same rules as if you traded a lump of zinc for cash or a loaf of bread.

Re:Hard core Bitcoin adopters (0)

Anonymous Coward | about a year and a half ago | (#43575753)

Nope.

And the currency conversion they must do to pay their tax will be taxed.

Bitcoin taxes won't work (1)

Anonymous Coward | about a year and a half ago | (#43575589)

The point at which CRA can collect taxes is when the bitcoins are sold into Canadian dollars.

This is NOT how it works if you get paid in US dollars. you still have to claim those US dollars as income on your canadian taxes in canadian dollars. I can't for the of me figure out what exactly the fuck I'm supposed to do when it's not converted into CAD, and have just been writing down the USD amount . This probably isn't correct, but given the parity level of the dollar, any mistake made doing this is less than 4%, and likely not in my favor.

I can't imagine doing this for bitcoin where the volitility would fuck you over in a heartbeat. Sure I got paid 100$USD in bitcoin on thursday, but by friday it was worth 1$, so do I claim 100$USD income or do I claim 1$ when I convert it to CAD?

Re:Bitcoin taxes won't work (1)

QRDeNameland (873957) | about a year and a half ago | (#43575963)

I can't for the of me figure out what exactly the fuck I'm supposed to do when it's not converted into CAD, and have just been writing down the USD amount .

My friend has a Canadian business that gets some USD income that gets deposited to a USD account in a Canadian bank. That income is converted at the average exchange rate for the quarter. For individuals, I believe you just use the annual average (I don't have USD income, but am a dual US/Canadian citizen and have to file to the IRS, and use CRA's average rate in reverse to report my CAD income in USD).

See the CRA's web page [cra-arc.gc.ca] for more details.

All normal - nothing to see here (1)

SplatMan_DK (1035528) | about a year and a half ago | (#43575609)

The only newsworthy in this, is the fact that the authorities are looking into BitCoin transactions, thereby raising BitCoins legitimacy in the playingfield.

Pretty much every country on the planet taxes both capitol gains and bartering. In fact, one may wonder what took the authorities so long ...

- Jesper

Fuck you, Canada (-1)

Anonymous Coward | about a year and a half ago | (#43575651)

How dare you. How fucking DARE you tax our bitcoins?

We fucking earned our fucking bitcoins by fucking mining these fucking things, and now you're going to fucking tax them? What right do you have to do this to us, you motherfuckers?

I hope the people that proposed this bit of legislation get fucking voted out of their motherfucking offices. Fucking taxes. What The Fuck. Fuck!!!!!!!!!!!

I mined these fucking bitcoins and I'm going to do what I have to do to keep the value of my money, even if it means storing my bitcoins in offshore accounts. Fuck you, Canada.

Srsly, fuck you. This is enough to make me want to join Anonymous and fight against the tyranny of my government.

Re:Fuck you, Canada (2)

Coeurderoy (717228) | about a year and a half ago | (#43575781)

Well you invested in some hardware to do the mining, and then got some return on investment, so what makes this different from for instance
buying a bakery, flour and various other things, and then selling bread, except of course that there is not much added work into the bitcoin mining opperation.

Why should it be tax free and other form of return on investment should be taxable ?

Now if you think that your government is not using its tax money wisely, you're free to try to elect somebody else, even try to get elected, but bitcoin mining is in no way "special".

On one hand it is "cool", but it is also trying to fix a human issue through technological means, and that does not work that well.

You are living in the same illusion as the people who claim that the internet treats censorship as a bug and routes around, it does not.
You can partially avoid censorship, more or less the same way as it was possible to avoid it 50 years ago, by taking risk, being prudent, and changing strategies very regularly.
But china is still a dictatorship, and our democratic advanced societies are rather less open to free speech than 20 years ago.
Moreover we live in a flood of data, where dissent is tolerated because it can be drowned by lolcats.

So instead of looking for ways to avoid taxes, make sure that they serve some useful purpose...

Already paying bitcoin taxes... (3, Interesting)

CmpEng (1123811) | about a year and a half ago | (#43575679)

I made about $6500 in 2011 from bitcoins and my accountant advised me to treat it as I would any additional income. I suspect this is making things official in the sense that the CRA will start looking into past years to see if people haven't properly claimed it. In addition to claiming the $6500 as income I was able to write off a portion of my house utilities, mortgage, etc... in accordance with local bylaws.

The summary (and TFA) is misleading. (4, Insightful)

nuckfuts (690967) | about a year and a half ago | (#43575955)

The CRA is not claiming a tax on "all transactions". They're claiming a tax on capital gains and income. If you make a transaction that results in a chunk of cash coming into your possession, or the equivalent in material goods, the value of that gain is considered taxable income. It has absolutely nothing to do with the medium of exchange. The CRA is not taxing BitCoin per se; they are taxing profits. They don't care whether you're using BitCoin or not. They're merely pointing out that using BitCoin as a medium of exchange does not confer some kind of exemption from taxes due.

Bitcoin Mining Business (2)

CanEHdian (1098955) | about a year and a half ago | (#43576099)

This should mean that you can start a business that is into bitcoin mining, and have your cost of doing business (Top-of-the line computers, GPU cards, etc.) deductable as a business expense.
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