Cryptocurrency, referred to as digital money, is the new technological innovation in the field of handling currency digitally or trading money for something else on the internet. Cryptocurrencies in Canada are not considered a legal source of money still, the government is considering it a means of income by regulating and taxing it the same way they handle other income sources.
In 2014, the Canadian Senate put forward the issue of taxation on bitcoin exchanges to help the people understand the general laws regarding the taxation and bitcoin exchanges legal laws. Canada has many platforms for online money investments. Visit the Canadian review website allreviews.ca to know more about the smart investment companies in Canada. It will help you find the best money investment source if you want to pursue a standard lifestyle. Many online investing platforms in Canada are providing people the opportunity to invest their bitcoin and cryptocurrency in a safe and reliable place. Here is a guide to the taxation laws on Canada’s cryptocurrency rules.
- Cryptocurrency as a gift
Taxation on cryptocurrency applies to bitcoin in the same manner as the normal money or barter value. If you receive cryptocurrency as a gift from someone, the giver is subjected to pay the duty for the product. For example, if you bought the cryptocurrency at $100 but gave it as a gift to someone where the unit was worth $110 then, you receive a capital gain of $10 to report and remit tax.
- Purchasing cryptocurrency
If you purchase bitcoin or cryptocurrency from someone, you are not liable to pay tax for it. But if you resell that cryptocurrency to anyone, then the gain and income you receive in return are taxable. For example, if you purchase a property from someone, the person selling it is liable to sell the property and pay the tax amount for it. But if you resell that property to someone else, you are liable to pay tax for it.
- Exchanging Cryptocurrency
What is the tax liability if you exchange cryptocurrency in the form of goods and services from people? If this is the case then, you have to calculate the income generated from the exchange that will determine the cost of taxes for you. Cryptocurrency is considered as a payment for services and goods in Canada and has the same rules for barter tax as other payment methods as it generates the same type of revenue. In this case, not only the person making the purchase but the person receiving the purchase are bound to the consequences of the taxes.
- Mining cryptocurrency
When you mine cryptocurrency, you receive an income in the form of some inventory. That amount generated in the income is viable to a tax amount.
Conclusion
Cryptocurrency is yet to be accepted as a reliable source of income by the Canadian authorities. Without its proper validation, it is considered eligible for tax payment as it generates an adequate amount of income for the users investing in the cryptocurrency and receiving goods and services for it.