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Crypto investors face tax crackdown as 70% non-compliant

thepost.co.nz

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Re: Crypto investors face tax crackdown as 70% non-compliant

#51

Post by skeeter2020 »

triceratops wrote: post #19
scotty79 wrote: post #4

> Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax. Make a stupid rule, be surprised people are non-compliant.

Is it any different from selling TSLA, buying MSFT and triggering capital gains?

not conceptually, though I don't know much about crytpo and have 2 questions:

1. can you recognize a capital loss on unregulated products like crypto and NFTs for favourable tax treatment?

2. do the exchanges (from an accounting perspective) trade directly between coins or move through a fiat (i.e. USD) currency?

So it might be more like "trading" stock directly without seeing the cash hit your account, which confuses people as to why they trigger a capital gain. The extra step of calculating the value of the source stock at the time of transaction is being missed.

Re: Crypto investors face tax crackdown as 70% non-compliant

#52

Post by bryanlarsen »

rsynnott wrote: post #18
kopirgan wrote: post #5

Article seems to suggest if you make gains but lost them later you still need to pay tax on the gain?! That's strange..

You buy a bitcoin for 20,000. You sell it for 50,000. At this point you probably owe capital gains on 30,000. You then take the 30,000, use it to buy an NFT, and later sell the NFT for 0.01 (because NFT). At this point you have had gain of 30k and loss of 30k. Now, it's going to depend a lot on exactly when all this happened and in which jurisdiction, but in many countries you probably owe tax on the 30k.

Which jursidictions? Certainly not mine. If they happened in different years you'd have a tax in one year and an equivalently sized refund in another, but they'd balance out.

Re: Crypto investors face tax crackdown as 70% non-compliant

#53

Post by DennisP »

triceratops wrote: post #19
scotty79 wrote: post #4

> Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax. Make a stupid rule, be surprised people are non-compliant.

Is it any different from selling TSLA, buying MSFT and triggering capital gains?

Legally no, at least in the US and NZ, but technically yes. On any stock exchange I know of, you'd sell your TSLA for cash, then use the cash to buy MSFT. On crypto exchanges there tend to be a lot of trading pairs with tokens on both sides, so cash is never involved.

Re: Crypto investors face tax crackdown as 70% non-compliant

#54

Post by [deleted] »

scotty79 wrote: post #38
Glemkloksdjf wrote: post #12

Earlier quoted context omitted.

For making profit or gains. The state doesn't give you protection on you buying shares either. And if someone would steal your bitcoin, shares or whatever, the state would allow you to use the legal system to get it back. Its your issue if you use something which is inherant intransparent, partially anonmous and globally unregulated. The tax is there to pay streets, kindergarden, schools, etc. btw.

> The state doesn't give you protection on you buying shares either. Of course it does. If somebody takes my money but doesn't give me shares they are going to jail. If you try that with crypto the police will laugh you off.

[deleted]

Re: Crypto investors face tax crackdown as 70% non-compliant

#55

Post by DennisP »

scotty79 wrote: post #38
Glemkloksdjf wrote: post #12

Earlier quoted context omitted.

For making profit or gains. The state doesn't give you protection on you buying shares either. And if someone would steal your bitcoin, shares or whatever, the state would allow you to use the legal system to get it back. Its your issue if you use something which is inherant intransparent, partially anonmous and globally unregulated. The tax is there to pay streets, kindergarden, schools, etc. btw.

> The state doesn't give you protection on you buying shares either. Of course it does. If somebody takes my money but doesn't give me shares they are going to jail. If you try that with crypto the police will laugh you off.

Sam Bankman-Fried tried it, and now he's rotting in jail wishing the police had laughed off his victims.

Re: Crypto investors face tax crackdown as 70% non-compliant

#56

Post by sigwinch »

hylaride wrote: post #16
kopirgan wrote: post #5

Article seems to suggest if you make gains but lost them later you still need to pay tax on the gain?! That's strange..

It makes sense when you think about it. If you made a huge capital gain and then "lost" it in Vegas how is that different than "losing" it via other means? Also, if this wasn't the case, it'd be a massive, gaping loophole. "Oh, I settled this stock in another currency, so I don't owe taxes yet/ever". There are some situations where it maybe there should be an exception. When employee stock options are exercised, that…

I think regular, small transfers are pedestrian-enough not to be reported. And in some countries, the information about a large transfer attracts offers of protection.

Re: Crypto investors face tax crackdown as 70% non-compliant

#57

Post by skeeter2020 »

scotty79 wrote: post #43
triceratops wrote: post #23

Earlier quoted context omitted.

> zero practical assurances when it comes to protecting your crypto assets What would that look like?

If a crypto market fails with my money I'd like to be reimbursed. Like when the MtGox failed and Japan did a full bankruptcy process and reimbursed creditor to their best ability. I don't mind paying tax on my trades to Japan whatever it might be. But paying a country I accidentally live in, just because I was lucky enough to get some gains that this country contributed nothing to, not even a legal framework, feels p…

I don't really understand the position you are presenting, but the idea of being reimbursed for money invested in an unsecured asset - forget about the wild volatility of crypto - seems very naive. A few things:

* a country may step in to prop up failing markets or even companies, but they do this outside of a bankruptcy process, and rarely (never?) directly.

* an owner of an unsecured asset like crypto would one of the last in line when processing the bankruptcy (funny enough, the tax obligation of the company would be right near the top)

* you don't pay tax on your trades, but based on the outcome at the time of the trade.

* most countries tax individuals based on residency, and I think there's a good argument that you do get benefits both the physical and societal. You can decide if it's "worth it" but I'm not sure how it's "accidental". It's definitely true that the linkage between paying capital gains taxes and driving down a newly paved road is long and complex.

Re: Crypto investors face tax crackdown as 70% non-compliant

#58

Post by scottiebarnes »

SoKamil wrote: post #49

> Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax. Okay, but what if you use stablecoin in between?

The swapping of any asset for another asset would be a taxable event

Re: Crypto investors face tax crackdown as 70% non-compliant

#59

Post by skeeter2020 »

mr_toad wrote: post #3

> However, gains made from trading assets, including property, were taxed, and that caught crypto investors as the dominant reason for buying crypto assets is to later sell make a gain, rather than holding them as a long term asset like a home, or rental property. Unfortunately what constitutes “trading” vs “holding” is ill defined in NZ law. At least with shares you can make a case you’re holding them for dividends,…

I don't think this is specific case here; seems more like less sophisticated investors buying new products don't know that selling them triggers a capital gain at the time of the transaction, regardless of what they may do with the proceeds AFTER the transaction date. In a nuteshell: a successful investment and an unsuccessful investment will be treated as independent events at the time the transaction occurs.
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