[kwlug-disc] Accepting bitcoin (and other cryptos) as a Canadian business

[Bob Jonkman]

-----BEGIN PGP SIGNED MESSAGE-----
Hash: SHA1

Chamunks wrote:
> So @Bob you're saying it's better to just cash out the 13% out of
> BTC and bank that for tax day?

I don't know if it's "better", but it's certainly more straightforward.

Until CRA starts accepting BTC as a payment method it needs to be
handled as a foreign currency. And I'm not sure if BTC is recognized
as a foreign currency, so then it may need to be dealt with as barter.
IANAA, YMMV, ETC.

Joel wrote:
> Your thinking is on the right track but I wouldn't record it that
> way.

Thanx Joel! As you point out, there are different ways of recording
the transaction, and different payment schedules to CRA. Retaining a
tax accountant for a small business is a prudent move.

- --Bob.


On 2017-10-20 06:31 AM, Joel Nahrgang wrote:
>> Not a tax accountant by any means
> 
> I'm not a CPA, but worked in public accounting for over 20 years,
> including tax.
> 
> Your thinking is on the right track but I wouldn't record it that
> way.
> 
> You make a sale for $100 CDN and charge $13 CDN for hst (13%). You
> would owe cra $13 for HST if that is all you did in the filing
> period. Regardless of what currency it is in, you just owe $13
> CDN.
> 
> If you happen to get paid in bitcoin, using Bob's example and
> received 1 BTC, that is what would show on your balance sheet until
> the end of the year/quarter/month when you need to adjust all
> currencies to reflect the CDN$ value.
> 
> If those currencies are higher than the CDN$ equivalent, then the 
> difference is recorded as income and can be taxed on it, This would
> just go into the overall income and your expenses would reduce the
> income.
> 
> On Thu, Oct 19, 2017 at 9:52 PM, Bob Jonkman <bjonkman at sobac.com>
> wrote:
> 
> Remi Gauvin wrote:
>>>> Not a tax accountant by any means
> 
> Me neither.
> 
>>>> If I traded $100 worth of my service for 1 BTC, then 2
>>>> months later,
> traded that 1 BTC for $150 cash (or equivalent goods/service), my 
> total taxable income would be $150
> 
> This needs a tax accountant.  When I generate an invoice for
> services rendered I charge HST (13%) at the time of invoicing.  So
> if I perform a service for 1 BTC then I would charge 1 BTC + .13
> BTC HST = 1.13 BTC.  CRA gets whatever that .13 BTC is worth at the
> time the services are billed. The .13 BTC are not mine, and I can't
> spend it or invest it.
> 
> If two months down the road my 1 BTC has increased in value 1.5x
> then that's a capital gains, just like any other investment. The .5
> BTC would be taxed at whatever the capital gains is.
> 
> --Bob.
> 
> 
> 
> On 2017-10-19 05:58 PM, Remi Gauvin wrote:
>>>> On 17-10-19 04:37 PM, Andrew Stevanus (KWLUG) wrote:
>>>>> The recent mention of the Humble Cryptocurrency Bundle and
>>>>> the ensuing discussion reminded me of something that I've
>>>>> been wondering about for a while. How would one go about
>>>>> accepting bitcoin and other cryptocurrencies as a Canadian
>>>>> business? Obviously, you'd still have to pay income tax, so
>>>>> would you calculate the equivalent amount in CAD when you
>>>>> received a payment and just use that? What exchange would
>>>>> you get the price from? Does it matter? Do you use the
>>>>> price when the invoice is generated, when the customer
>>>>> sends the payment, or when it is actually confirmed on the
>>>>> blockchain? Are there any additional rules that would apply
>>>>> when accepting cryptocurrency versus CAD?
>>>>> 
>>>> 
>>>> Not a tax accountant by any means, but if you'll allow to
>>>> play one for a bit.
>>>> 
>>>> I don't really think it matters a great deal how you convert
>>>> value at the time you receive the coins, (so long as it's
>>>> consistent and reasonable.  Basically, it would be the same
>>>> as barter.).  However, that value would then further be
>>>> converted to gain/loss when you dispose of said coins.
>>>> 
>>>> ie.  If I traded $100 worth of my service for 1 BTC, then 2
>>>> months later, traded that 1 BTC for $150 cash (or equivalent 
>>>> goods/service), my total taxable income would be $150.
>>>> 
>>>> 
>>>> 
>>>> 
>>>> 
>>>> _______________________________________________ kwlug-disc
>>>> mailing list kwlug-disc at kwlug.org 
>>>> http://kwlug.org/mailman/listinfo/kwlug-disc_kwlug.org
>>>> 
> 
>> 
>> _______________________________________________ kwlug-disc
>> mailing list kwlug-disc at kwlug.org 
>> http://kwlug.org/mailman/listinfo/kwlug-disc_kwlug.org
>> 
> 
> 
> 
> _______________________________________________ kwlug-disc mailing
> list kwlug-disc at kwlug.org 
> http://kwlug.org/mailman/listinfo/kwlug-disc_kwlug.org
> 

- -- 
Bob Jonkman <bjonkman at sobac.com>          Phone: +1-519-635-9413
SOBAC Microcomputer Services             http://sobac.com/sobac/
Software   ---   Office & Business Automation   ---   Consulting
GnuPG Fngrprnt:04F7 742B 8F54 C40A E115 26C2 B912 89B0 D2CC E5EA

-----BEGIN PGP SIGNATURE-----
Version: GnuPG v2
Comment: Ensure confidentiality, authenticity, non-repudiability

iEYEARECAAYFAlnqJiUACgkQuRKJsNLM5eqPQQCgoyBt/RObciT4w67uCNmGfKc6
dgcAoM/s8DCT18MWoHcc+U2lnyAkgKYa
=6bhI
-----END PGP SIGNATURE-----