RE: ADSactly On ADSACTLY - Part #38 - Taxation of Crypto - Part #1
I think taxing crypto only when you sell back into fiat has a problem, which is many people don't cash out into fiat. I can just leave it as USD or USDT or any currency on an Exchange, I can even privately sell my bitcoin into cash or goods and services. This negates taxes from BOTH parties which isn't fair to a normal tax payer.
In Australia, everyone with an income should pay tax, otherwise they can claim income benefits for people who don't make much money or make none. It isn't fair on normal tax payers to be supporting people with income but aren't taxed on it. Plus, tax helps keep the country running.
However, taxing crypto while you're buying/selling is dumb considering the volatility of crypto. This just isn't practical nor fair, as it benefits hodlers and fucks with day traders.
I think the best way is to be taxed when you BUY crypto into fiat AND taxed when you sell crypto back into fiat. This may be unpopular but I think it gets rid of all the problems I mentioned above.
Taxation was bound to happen. You don't reach these levels and not get noticed.
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Allow me to play Devil's advocate.....if they only taxed crypto on conversion to and from fiat, most people would circumvent that by never cashing out. They would use crypto as a currency and use it to purchase goods and services without ever cashing out.
I know it sucks, but look around. All levels of govt are scrounging around for any new sources to tax. Do you really think they are going to ignore an asset that went from pennies to $20K???
Bite the bullet, pay the taxes, avoid any unnecessary hassles.
So, you would tax people for buying the pebbles. Not even governments do that... :D
It's better than taxing while holding the pebbles! Plus, if you only tax after you swap your pebbles back to money, it creates a whole list of problems I listed before. So only capital growth tax on crypto isn't gonna work, and taxing cryptos while buy/sell is not practical, I see taxing when coming in AND out as a fair compromise!
Buying and holding shouldn't be taxed because pebbles are not legal tender. Only legal tenders can/may be taxed. We would accept taxing of revenues when sold for fiat and will continue with our thesis in the next post. Thank you for your contribution to the discussion!
Litecoin, will you be my Valentine?
That is funny!
Exchanging your cryptos into USD on an exchange is a tax event and you may have to pay capital gains tax if there were gains.
You can buy stuff with cryptos directly but that's a tax event, too. If the tax authorities catch you, you will have to pay your taxes and a fine, too. And they often will at least if you're not buying OTC.
Ordinary But Great
So what benefit do you receive in exchange for paying tax to the government for buying crypto? Does your government spend that tax revenue for your benefit or for their own benefit? Does your government really protect you?
Does your government really care about you?
I have paid taxes for over 20 years and, sadly, feel robbed. My government does not even try to do a good job of respecting its own citizens, much less respecting its obligations to them.
Hi there @cryptoeater - I was only wondering today if there would be tax implications for earning income in the cryptocurrency world and I was going to ask #teamaustralia .
Do you know how the ATO currently views cryptocurrencies? As in are you expected to declare the income? And if you did have to declare the income are you allowed to claim the related expenses ( internet costs, travel etc).
I appreciate this is fairly new for governments to make rulings but have you or anyone you know declared this income or been challenged about the income and expenses.
Thanks!