bitcoinvancouver

The GoTo Site for all things Bitcoin in Beautiful Vancouver British Columbia Canada

Bitcoins Aren’t Money, at Least According to the Canada Revenue Agency

Bitcoins Aren’t Money, at Least According to the Canada Revenue Agency

Bitcoins are a hot topic these days. And I must admit, I’m starting to get really excited about them and their future. Bitcoins are a completely decentralized digital currency that can be sent through the internet. The transfer of bitcoins happens on a peer to peer basis and there is no bank or country that controls them other than a rather complex system called cryptography. It all just seems so futuristic.

In fact, bitcoins have been so hot that they have literally doubled in value in recent months resulting in the cost of a bitcoin hovering around the $300 CDN mark at the time of this article.

ACCEPTING BITCOIN PAYMENTS ON THE RISE

More and more websites have been starting to accept bitcoins as payments for goods and services. The list of sites are numerous, but some of the bigger ones include WordPress, Reddit and OkCupid. In fact, China’s equivalent of Google, Baidu, started accepting bitcoin payments in mid October for some of its online security services.

Needless to say, the bitcoin buzz is in full swing and online retailers and service providers around the world are not only taking notice, but are also incorporating bitcoins into their business models going forward. With its massive rise in popularity, it’s only a matter of time before more start doing the same.

CANADA REVENUE AGENCY ISSUES

When these types of things come on the scene and start to really gain some attention, you can be sure that the Canada Revenue Agency will be right there by its side to chime in on their tax implications.

But the issue of bitcoins presents a real dilemma for the CRA. As you can see from the above, the fact that it’s decentralized means that there is absolutely no government regulation surrounding the issuance and trail of bitcoin transactions. No doubt, the government is likely getting a bit nervous.

Just this week, the Canada Revenue Agency put out a brief fact sheet entitled “What you should know about digital currency,” commenting on the tax implications of digital currencies specifically singling out bitcoins. Although brief, the fact sheet is interesting indeed. As expected, the CRA specifically states that digital currency transactions are taxable, but their classification and how to treat the transaction is what’s intriguing.

BITCOINS AREN’T MONEY

What caught my eye in the fact sheet is that the CRA equated bitcoins to a non-legal currency, and since the CRA stated that they are a non-legal currency, they likely had no other option but to classify any transition involving them as as a barter transaction.

Going even deeper into the CRA’s interpretation bulletin on barter transactions, the CRA defines a barter transaction as one that is, “effected when any two persons agree to a reciprocal exchange of goods or services and carry out that exchange usually without using money.” By categorizing bitcoin transactions as barter transactions and going according to their definition of a barter transaction, the CRA is essentially saying that bitcoins are not considered a form of money.

Advertisements

Questions, Comments, complaints or observations? Your input is important to us.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Information

This entry was posted on November 10, 2013 by and tagged , .

Follow me on Twitter

bitcoinvancouver2013@gmail.com

bitcoinvancouver2013@gmail.com

Blog Stats

  • 9,810 hits

Follow me on Twitter

%d bloggers like this: