Tax time in Canada! That time of year when people begin collecting pay stubs, receipts, loan statements, and various other reports to compile and learn how much they earned and how much they owe the government, or the government owes them. This year, I have a new item on my collection list of info to gather: my 2017 BTC earnings and expenditures!
Fortunately for me, my interest-bearing wallet over at Freebitco.in lists the last 100 transactions under my stats button on the menu bar. These stats go all the way back to April 9th for me, which was the very first amount I sent over after discovering their new wallet status and the daily compounded interest payments! I copied my deposit stats to a spreadsheet and discovered I earned myself a whopping 0.006+ BTC last year! Considering I did it entirely with the use of Faucet Alley (a combination of faucets and a BTC site), and that’s pretty good for only investing time and effort. At today’s USD exchange value, that’s a total of $64.51. If exchanged into Canadian, I earned $81.96 at current rates. The only figure I don’t have at the moment, is how much of my total interest amount at Freebitco was earned on my 2017 deposits. Reviewing what the CRA has said regarding reporting expenditures spares me this calculation for this year. They only want the value of the BTC I spent at the time I spent it. This is easy for 2017 as I made just two purchases with a BTC pre-paid credit card to help cover a monthly subscription fee. I go to that site and it tells me the exact amount I spent in CAD.
For 2018 however, I will need to start keeping other receipts, such as those I spent in January proving that I could shop at a thrift store using a BTC-pre-paid physical debit/credit card. I kept one of those receipts, but the other was a grocery purchase and I almost NEVER keep those! So I think that amount will have to be estimated. Fortunately, the price of the item rarely changes. I will need to keep track of these things when I go to do my 2018 incometax.
I’m actually excited at the prospect of figuring all this out! To me, this is the logical culmination of the 2017 experiment, as I figure out how to be above board with my earnings, their interest and how I spent it.
Interestingly, the CRA official rules do not account for EARNING BTC as opposed to buying/investing Canadian funds into BTC. Capital gains tax applies in the latter scenario, but there seems to be an odd silence about the first at least from the position of someone who is not someone else’s employee. Clearly, the idea that someone can earn their way into possession of BTC according to CRA can only happen if a seller of goods and services accepts BTC as a form of payment, if they buy BTC on an exchange or via a BTC ATM, or if their employer paid them via BTC. Employers paying employees via BTC have to report the CAD equivalent in their payroll records at this time.
I have set up my website to allow for the payment of my services via BTC, but no time block purchases as of yet. When a seller accepts BTC as payment, the CRA says this falls into the barter set of income-reporting rules. This is handy information once clients do start payment for my services via BTC.
Incidentally, accounting programs such as Quickbooks now have a BTC module to assist a business in keeping track of this form of payment for their storefronts. Plugins for WordPress and online e-commerce sites exists from the likes of Bitpay and GoURL to allow online businesses to accept BTC, that’s actually how I am able to accept it at FCS. Companies such as Bitpay and Ingenico have teamed up so that brick-and-mortar stores who use the Ingenico POS terminal can simply enable a Bitpay plugin and accept BTC at the cash register.
The stage is being set for sellers of goods and services to almost seemlessly accept BTC as just another currency at the till.
As I wrote this blog post today, I was referencing CRA notices and my own records. The process meant updating my records (another plus) and ensuring I have what is necessary for last year before April this year! *happy dance*
Be sure to explore the various links in today’s post, particularly if you are a Canadian reading this! If you are dabbling in BTC, you might need this information too.
*Do note: Some of the links in this article are affiliate links.
FAQs
You may then be asked to complete an application form by an urgent deadline in order to receive your tax refund or credit. It's important to remember that the CRA will not ask you by text message or email for any personal information, bank information, or to make payments by e-transfers, gift cards or cryptocurrency.
Does the IRS know I have Bitcoin? ›
What if I get audited? The IRS has started auditing taxpayers specifically to evaluate their crypto trades. This is nothing to worry about and you are expected to disclose any addresses or wallets you own or control and any exchange accounts you have.
How much tax do you pay on crypto in Canada? ›
Canada has no short- or long-term capital gains tax rates. Rather, crypto capital gains in Canada are taxed at the same rate as Federal Income Tax and Provincial Income Tax. Note you'll only pay tax on 50% of your total capital gains as an individual crypto holder. Professional (day) traders will pay 100%.
Do you have to report crypto on taxes if you don't sell? ›
Crypto is generally not subject to immediate taxation, assuming you purchased the crypto as an investment and didn't acquire it as a form of income or by other means. This means that when you US taxpayers purchase crypto, there is no immediate reporting requirement until you sell.
Will revenue ever text you? ›
Please remember that Revenue will never send unsolicited text messages. If you receive an unsolicited text message purporting to be from Revenue, ignore it.
Will Canada Post send me a text message? ›
Legitimate Canada Post SMS tracking or mail notifications and marketing communications will only show the sender as 272727 or 55555, and only if you have signed up to receive those notifications. SMS messages may also come from customer support via phone numbers 613-734-1002 and 613-734-1004.
Do I have to pay taxes on Bitcoin? ›
The IRS treats cryptocurrencies as property for tax purposes, which means: You pay taxes on cryptocurrency if you sell or use your crypto in a transaction, and it is worth more than it was when you purchased it. This is because you trigger capital gains or losses if its market value has changed.
How to cash out Bitcoin without paying taxes? ›
There is no way to legally avoid taxes when cashing out cryptocurrency. However, strategies like tax-loss harvesting can help you reduce your tax bill legally. Converting crypto to fiat currency is subject to capital gains tax. However, simply moving cryptocurrency from one wallet to another is considered non-taxable.
Is Bitcoin legal in Canada? ›
Yes, Bitcoin is legal in Canada. You can hold, buy, and sell it without any problems. However, some trading venues are not registered with Canada's security regulators, meaning that they could be illegally selling you Bitcoin.
What happens if I forgot to report crypto on taxes? ›
In fact, failing to report income, gains or losses from your crypto transactions on your taxes may come with stiff consequences. This may include potential audits, penalty fees, interest charges on unpaid taxes or even criminal charges.
US taxpayers who fail to report crypto on their taxes can face serious consequences, including fines and penalties as high as $100,000 and up to five years in prison.
Will the government of Canada text you? ›
The CRA will never text you. If you get a text message claiming it's from the CRA, it's actually from a scammer. The CRA sends email notifications only to tell taxpayers that they have a message waiting in their online CRA My Account. They won't send the message in an actual email.
Does IRD send text messages? ›
Inland Revenue will never put the dollar amount of a refund in an email or text message and will not ask for your credit or debit card details in order to pay a refund. They will also never ask you to reply to an email or text message to provide your bank account details.
Did you get a text with your sin that claims to be from Canada Revenue Agency? ›
Did you get a text with your SIN that claims to be from Canada Revenue Agency? It's a scam. Tax season is here and with it, a new scam. The Canadian Anti-Fraud Centre says it involves a text message, containing a person's name and personal info, that appears to come from the Canada Revenue Agency.
Does CRS send text messages? ›
Your reference number will be visible on all contact we issue including Email, Letter & SMS. Your reference number will be located at the end of every SMS we send you. Your reference number will be located at the top of every email we send you.
Tax time in Canada! That time of year when people begin collecting pay stubs, receipts, loan statements, and various other reports to compile and learn how much they earned and how much they owe the government, or the government owes them. This year, I have a new item on my collection list of info to gather: my 2017 BTC earnings and expenditures!
For 2018 however, I will need to start keeping other receipts, such as those I spent in January proving that I could shop at a thrift store using a BTC-pre-paid physical debit/credit card. I kept one of those receipts, but the other was a grocery purchase and I almost NEVER keep those! So I think that amount will have to be estimated. Fortunately, the price of the item rarely changes. I will need to keep track of these things when I go to do my 2018 incometax.