Bitcoin and Other Cryptocurriencies
What is Bitcoin?
Bitcoin is a new currency that was created in 2009. Transactions are made in a decentralized network. Bitcoin can be used online to purchase most items and the use of which has been steadily increasing. Bitcoin uses block chain technology without the need of a trusted authority or central server
What is blockchain?
Blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.
Why should I care?
As we see the increase of use of virtual currencies, we are also seeing the increase need to regulate. With increased regulations comes tax.
According to the Canada Revenue Agency, Tax rules apply to digital currency transactions, including those made with cryptocurrencies. Using digital currency does not exempt consumers from Canadian tax obligations.
This means digital currencies are subject to the Income Tax Act.
Buying goods or services using digital currency
Goods purchased using digital currency must be included in the seller’s income for tax purposes. GST/HST also applies on the fair market value of any goods or services you buy using digital currency.
Buying and selling digital currency like a commodity
When you file your taxes, you must report any gains or losses from selling or buying digital currencies.
Digital currencies are considered a commodity and are subject to the barter rules of the Income Tax Act. Not reporting income from such transactions is illegal.
At HerrickGlobal, we can give you peace of mind that comes with knowing you won't face the unknown alone. Our highly trained advisors can handle all your tax filing needs quickly and efficiently. Schedule an appointment today - we look forward to meeting you!