ADSactly On ADSACTLY - Part #38 - Taxation of Crypto - Part #1
ADSactly on ADSACTLY - part #38
ADSactly - Taxation of Crypto - Part #1
Once upon a time there was a bunch of children playing on a beach. They've decided to collect pebbles and then exchange them for shells and snails gathered from the sea. A group of boys came by, saw what the children were doing and decided to take the 'value' away from them just because they didn't like the game. Grown-ups observed but didn't react, as they couldn't understand why would the big boys need pebbles at all. A huge amount was lying right there on the beach, anyway. The grown-ups missed a fact that the big boys weren't really interested in pebbles as a proof of value but they prefered to take away children's pocket money, instead of pebbles. If the grown-ups understood, they would have stopped it, right?
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This analogy speaks volumes about crypto taxation. Taxation of crypto is a hypocritical joke, executed by the elites for to exercise their dubious justice on 'free' people. How can something that doesn't exist be taxed? How can state tax something that has no public proof of ownership and is not legally verified nor accepted as a legal tender? That's the first issue. The second one would be the mechanism of taxing. How is it possible to tax a virtual currency that constantly fluctuates, unless the revenues are converted into fiat money? What they are doing right now is trying to tax casino tokens before a person has left the casino...
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We can understand the fuss regarding ICOs. Selling virtual tokens for fiat money and making a profit is a process that can make people rich in just a few days and it deserves to be taxed. If one's collected a mountain of fiat money, paying tax is alright and fair. But, we are not sure that the same should apply to ICOs which collecting crypto instead of fiat. These are still pebbles. Make fiat money - pay the taxes. Keep pebbles - play with them. If someone leaves all the gains in crypto, why should the person be taxed at all? Crypto is not recognized as legal tender, right? The law should understand that crypto, stashed away in the deregulated market environment, is only pebbles on a beach.
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If a person pays for goods or services in crypto, it's virtually untraceable and will remain so in a foreseeable future. Nothing can be done before crypto is legally accepted as regular money. A beautiful conundrum. They cannot recognize crypto because it would change the current financial system from the grounds up. But, without a full legal recognition, there are no effective means of taxing it. This is also why, my friends, crypto is here to stay.
One way or another.
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Each of us has a decision to make.
One can take the submissive route, giving away pocket money to the bullies or one can stash crypto in a paper wallet where nobody can ever prove its ownership in any way. The decision is entirely up to each individual. But, whatever you decide to do, don't give in to fear. They are deliberately creating it, through various heavily controlled media outlets, out of a sheer realization that there can be no upper force imposed on the matter. The omnipresent ruling elites haven't felt like that in ages.
Poor them.
Where are the grown-ups? :D
To be continued...
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ADSactly on ADSACTLY - Part # 29 The Future Of Crypto
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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!
You have a great point regarding tax on crypto. Here in the US you do have to pay taxes on crypto the same way you pay taxes on property. That being said, the best way to minimize is to buy and hold for more than a year. Short-term capital gains are taxed at your normal ordinary income tax rate while long-term gains are taxed at a reduced rate Of course, given the volatility, it still might be in your best interest to lock in the profit now and take the tax hit, but that is up to you to decide. However You don’t pay any taxes if you hold yourcrypto regardless your profits.
While I agree taxing it as property is extremely difficult to calculate (on both sides), I see where they are coming from. If you only tax crypto when it's converted to fiat, all of the purchase paid for in crypto will go untaxed. I'm not defending it, I'm just saying I understand their POV.
We will comment the "property" insanity in the next post. Thank you!
That’s gona be very interesting!
The only way to tax crypto that makes any sense is to tax any capital gains when your sell them for fiat. In Finland, Steem rewards are taxed as income tax because they are rewards for work. And they are taxed only when you exchange them into euros. I don't know whether you need to take fluctuations of STEEM and SBD value into account.
Working out how much you owe in taxes is a bitch. Maybe we should just move to a crypto tax haven after retirement and cash out only then...
I agree! That’s one of the main reasons I buy crypto and hold it long therm. I invested only what I’m prepared to loose. This way I avoid potential stress due to volatility.
Although I love the message conveyed by the text and I totally agree with it, I think that it is not considered the position of the minnows or, to continue with the analogy, what the children think.
Yes, we are the ones who have the power to say "NO" to the predatory governments that want to squander the economic revolution that Nakamoto started, but if in the end the big investors don't do the minimum enough to ensure that those governments don't come close, how we do the little ones?
I plan to open a fast food establishment and be the first establishment in my country that accepts Steem and SBD as a payment method, because here, in Venezuela, Steemit has had an unprecedented growth; but how do I do when I'm required to pay taxes? I tell them that I will not answer for those products that I was paid in SBD? Who will support me? Who is going to say: "leave him alone, he only made a transaction with a virtual currency and that's why you can not impute it"?
Big investors can. They have to be the basis to build a "free" corruption economy (we know that FIAT is the best means to corrupt any entity or official), through cryptocurrencies.
I can continue collecting pebbles in the sand, but when they want to remove them I need the support of the largest pebble collectors, otherwise I will always feel alone and afraid of the big governments.
As often happens with @adsactly, this is another enriching text; not only for the information, but for the "pedagogical" way of transmitting it.
This is a smart and encouraging post!
Just yesterday, a friend of my community, a steem witness, decided to leave steemit and all of the crypto world after a meeting with his lawyer and hearing what the government expect him to do in regard to taxing - he described a pretty insane proccess and requirements. I'm not sure he is entirely correct but there is a large degree of truth in what he told for sure.
People are worried about taxing and legality, but I think - like one can also understand from this article, that regulation aren't totally bad as it will force the authorities to accept crypto as fully legal which will boost things fast, we can see it already happening in some places in the world.
I hear that here in Israel, at least for those not trading but getting paid in crypto - taxing will be only when converting to fiat and it would be considered just like any other salary regarding tax matters.
I just hope people in the authorities that are open minded and freedom lovers will act from the inside to advance normal and fair solutions to this whole issue.
Folks are always going to try to find away around taxes. It's the eternal struggle.
If they accept crypto as a legal tender, and accept taxes to be paid in crypto - all good from this end ;)
This is also being discussed in the following part.
In my opinion also, the Cryptocurrencies should become legal tender money on global level so that we all can enter into the new age of digital money with smooth, because now Cryptocurrency is becoming an great freedom.
Stay Blessed.
I don‘t think that you have to leave crypto just because of taxes. There are possibilities to handle it within the actual Tax law. Maybe there is some work to do (for example: how to find out the correct taxable amounts). I have tried to get closer to this issue for German Tax law, since I am a German Tax Advisor. Have a look at my Blog, if you are interested.
The taxation of the crypto currency is nothing more than an attempt to establish control, an attempt to prove to themselves that they are still running the game. What does it say? This shows that the government understands the whole significance of the crypto currency and understands to what it can lead in the foreseeable future. They can not lose control. Therefore, the attempt to regulate this market will continue. I'm sure this is the beginning of an invisible war, which will be won by cryptography.
The best strategy is to keep crypto-currency assets in purses for a long time. It is time that plays a decisive role. All who believed in the new digital economy will be rewarded as a result.
Thank you:)
Never the less, it was bound to happen. You don't have the kind of run-ups we've seen an expect to get away scott-free!
Very much so!
taxation = legal?
could be debated...
Hi @adsactly ! This is an excellent explanation about whats going on with crypto legally and your analogy with the casino is great.
If people want to keep the casino tokens and not cash out, they can go home with any color of token and not pay a dime! Next day when they come back they can use it (if not expired) and only once they cash out, they pay taxes.
Very well explained for anyone to understand!
By the way, I made a post the other day about STEEMER.NET app that @cryptomonitor is creating and mentioned you at the end!
https://steemit.com/adsactly/@gold84/an-amazing-app-steemer-net-project-app-for-windows-and-android-wallet-account-creation-price-alerts-to-your-email-an-exchange-toLooking forward to your thoughts on it when you get the chance.
Regards, @gold84
If legal system ban crypto - we can make another type of casino, like in Japan did.
You play casino, but can't cash out in money equvalent in Japan - it's illegal. What casinos did? They made system, when you buy special casino money, play with them, and then you can buys some fancy toys with thiscasono money. After you go to street, and there you can find special pawnshop. Here you can exchange this toy for real money - it's legal))
This pawnshop related to casino))
If I begin a session of poker at the Commerce Casino with $100 US Dollars, then buy $100 in casino chips, and then win and leave with $600 in casino chips, I still have a profit for the session of ($600 - $100) = $500. I owe tax on the $500 of income, whether I cash out the chips or not.
❤️❤️I love this topic so much! Same happens in Russia. There they want to make crypto currency equivalent to property, thus property tax.
I feel like politicians just don't know what to do. They definitely don't want to allow this free (not taxed) "money" circulation... But also, in reality they have no idea that this can change everything for us and for them.🤔
More power to us, less to them and I think with every year they will feel how they will loose power & money. Important thing is that people don't trust media when they try to put crypto currency in bad light.👊
STEEM on
Really a nice analogy...But you should pay your fees :p
yes :P
Nice analogue it is. These crack-downs are just unecessary @kouba01
Hey @adsactly
I’m currently trying to help a minnow start a contest for other minnows. He is giving away SBD for a reward and resteeming the submissions for the contest. But he needs help in getting noticed so he can run his contest successfully.
He is trying to create a network of minnows who will follow resteem and upvote each other so they can all grow together and not remain a small account for years. But again, he cant really get this done with his current account status being so small and unnoticed. So if you could help in any way, here his post about it:
https://steemit.com/minnow-contest/@average-joe/enter-the-minnow-contest-and-win-some-sbd-getting-minnows-and-all-users-involved-contest-1
Please check it out. Thanks for your time