Bitcoin users currently face a global patchwork of inconsistent tax treatment
By Laura Gavioli
Tax authorities around the world continue to wrestle with issues arising from the use and sale of bitcoin currency. The Canada Revenue Agency (CRA) and the US Internal Revenue Service (IRS) have both announced that bitcoin is not a currency for tax purposes. Other jurisdictions have taken different approaches.
In recent publications, the CRA summarised its views on how certain transactions involving the use, sale or mining of bitcoins may be taxed under Canada’s Income Tax Act and Excise Tax Act.
For example, the CRA stated that the use of bitcoins to purchase goods or services would be treated as a form of barter transaction. If a business sells goods or services in exchange for bitcoins, that business must report its income from the transaction in Canadian dollars (i.e. the fair market value of the bitcoins at the time of the sale). Goods and services tax (GST)/harmonised sales tax (HST) would be applicable on the fair market value of the bitcoins that were used to pay for the goods or services…
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