Online currency, real-world taxes

The Canada Revenue Agency has marked the opening of Bitcoin’s first ATM in Vancouver by issuing guidance on the internet currency.

Read: First Bitcoin ATM opens in Vancouver

Your clients should know taxes apply to Bitcoin transactions. The CRA treats any exchange involving Bitcoin as bartering—meaning it doesn’t consider it a legal currency.

You can find more CRA information about the tax implications of bartering here.

Bitcoins can also be traded like a commodity, and any resulting capital gains or losses could have an effect on your clients’ taxes. Check out paragraphs nine to 32 of this CRA guide for the details.

If your client has been trading or using Bitcoin without disclosing it to the CRA, they can make a voluntary disclosure to correct the record.

Read: A Bitcoin ETF?

The CRA’s guide comes as the Telegraph warns Bitcoin could be vulnerable to an internet attack.

Bitcoin is virtually mined, not minted. Computers slog through complex algorithms that when completed result in a new Bitcoin being unearthed and the miner getting a share of transaction fees.

Miners could get more revenues than they’re allotted and eventually gain a controlling interest in the currency, computer scientists at Cornell University have realized.

At that point, reports the Telegraph, the value of Bitcoin would collapse.

Read more here.

Also read: SEC charges Texas man with running Bitcoin Ponzi scheme

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.