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How does one even correctly report these earnings: In Canada there is a form called a T1135, i was filling mine out today :) This form asks for a few key thing
by verelo 9y ago
How does one even correctly report these earnings:
In Canada there is a form called a T1135, i was filling mine out today :) This form asks for a few key things related to any securities you hold in foreign countries: 1) Max Fair Market Value, Current Fair Market Value, Grioss Income (I.e. rents extracted before expenses), Gain (loss) of any depositions.
Which country do I hold my asset in if I purchase bitcoins? Are they Canadian or foreign? Does it depend where they are kept? It doesn't in the case of stocks, even those on the NYSE but for Canadian corps do not fall under this reporting requirement, and inversely those on the TSX for US companies do fall under this requirement! So what nationality are bitcoins and all other crypto for that instance?
You need to fill this out if you have > $100,000 CAD worth of foreign assets, once for each country you hold assets in (regardless of purchase price, we're talking max fair market value).
The fee for not filing this form is a flat $2,500 + interest of any taxes owed.
The question this raises for me, if someone bought $1000 worth of bitcoin in 2012 and retained them until today, they easily have over this limit. I am sure there are a fair few people that will get messed up here. I'd love for governments to provide clearer guidance here to prevent upsets later.
Also, T1135's are almost impossible to file correctly. Seriously, they're a stupid form. IMO the CRA should just ask for a report of all your trades and the relevant countries (assuming we can answer the country question, i suppose?) and leave it there - and they do in the form of a T5008 or you can report it under the Capital Gain / Loss section (I think it's called Schedule 3).
I guess what I'm saying is this: It's effing hard to report correctly, even when you try. In my life, I've spent more on tax lawyers than I have on cars. I feel like I do everything I can, I feel like I've been good...but i sometimes get kept up late at night worried I messed up and no one will believe it was an honest mistake.
- shaki-dora 9y agoIt’s the same as any other profit you might make through currency speculation. If you can’t figure out the relevant corns, maybe you shouldn’t be trading in these markets in the first place?
- verelo 9y agowell good news isn’t i don’t haha! I guess that makes more sense, but even in currency speculation there is a clear relationship to a country. If that doesn’t impact it, then i guess that is reasonable...i still hate t1135s!
- ChuckMcM 9y agoI'm not a tax preparer or an attorney. That said, As a US citizen I've always reported capital gains (or losses) on Schedule D when filing my taxes. I typically have the Schedule D and a an attached list of gains and losses. If you bought coin and are still holding it, you don't owe any tax (you aren't taxed until you convert it into dollars). When you sell it, then the gain is the difference between what you paid for it and what you sold it for (less any transaction fees). Its fairly straight forward. That said, if you have a gain from buying something and reselling it but that sale is never reported to the IRS for any other reason (in my case the bank holding my IRA reports the gains to the IRS anyway), then there might be the temptation to just "forget" about it. That probably seems harmless except that something can happen (like the person who bought your coin mentions they bought it from you) and if the IRS finds you knew something and didn't report it, they come back to you and take what they are owed.
- Namrog84 9y agoI haven't done anything with cryptocurrencies but when I filed my taxes using turbo tax a few weeks ago. They did ask the question regarding it and I'd assume theyd have also guided you in the right direction. I know there are lots of tax helper programs out there but I thought like 95% of people have someone else do taxes or use some forms of automated tool to assist them. I'd hope all these tools ask the question and prompt a direction