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Bitcoins are all the rage lately — and transactions involving them are taxable, according to the Canada Revenue Agency.
Bitcoins are an example of digital currency, electronic money that isn’t produced by government-endorsed central banks or backed by national currency.
They are often traded as investments but they are increasingly being used in barter transactions for goods and services.
That’s when the Canada Revenue Agency (CRA) thought it was a good idea to step in and clarify its tax rules.
A barter transaction, according to the CRA, occurs when any two persons agree to exchange goods or services and carry out that exchange without using legal currency.
“For example, paying for movies with digital currency is a barter transaction,”the CRA statement reads. “The value of the movies purchased using digital currency must be included in the seller’s income for tax purposes. The amount to be included would be the value of the movies in Canadian dollars.”
Because digital currency can also be bought or sold like a commodity, the CRA confirmed any resulting gains or losses could be taxable income for the Canadian taxpayer. Paragraphs 9 to 32 of an interpretation bulletin (IT-479R, Transactions in Securities) can help you better understand whether your transactions are income or capital in nature.
Of course, this is all part of the CRA’s crackdown on tax evasion. The agency is “very active in pursuing cases of non-compliance” to ensure the tax system is fair for everyone.
Make better business decisions
Don’t miss our free workshop with Grant Basiuk of Forzani Business Coaching. You’ll learn how to watch your business scoreboard and make better business decisions.
The free workshop is scheduled for Friday, November 29, from 9:30 to 11:30 a.m, at the Elks Lodge and Golf Club. Register early at Eventbrite. We have limited seating available.
You can also <contact Grant to book a meeting.
Fall Into Orange
Our Calgary photo contest ends on Friday
We’re still looking for entries into our #FallIntoOrange photo contest. Don’t worry if your pictures are snow-covered … that’s part of the beauty of autumn in Calgary!
Take your picture and add it to our Facebook page. You can also Instagram or Tweet it with the hashtag #FallIntoOrange.
We’re taking submissions until Friday, November 15.
Here to help
A1 Accounting, a Calgary accounting and bookkeeping firm, is here to assist you with your taxes and planning. We specialize in personal taxes and small-business accounting and financial services. Contact one of our tax specialists and we can help you optimize the tax benefits and credits available to self-employed individuals and small businesses.
Fill out our contact form or give us a call at 403-226-8297.