Can we pool our knowledge regarding TAX and crypto and make some kind of FAQ/sticky?

AlmightyCushion

GreeBo wrote: »

An extreme but plausible example of why your approach is wrong would be:

You buy 100 BTC for €10 back in 2007.

You sell 99.9995 BTC for €20K each, receiving €1,999,990

Do you think you don't owe any tax since you still have €10 worth of coins left?

That isn't his argument (I have seen others make it though). His argument is that he should only pay tax once he sells more than his initial investment as only then has he made a profit. So given the scenario you posted, in his opinion he believes he should pay tax on €1,999,990 - €1,000 so €1,998,990. Then the remaining €10 worth of coin would be taxed as all profit when he sells it.

Dades

Would you not pro-rate your cost against your gain?

If you sell 10% of your holding allow 10% of your cost against it (on a FIFO basis if subsequent investments were made)?

AlmightyCushion

Dades wrote: »

Would you not pro-rate your cost against your gain?

If you sell 10% of your holding allow 10% of your cost against it (on a FIFO basis if subsequent investments were made)?

Yes, that is how it is generally done.

.G.

Its all very confusing.Another scenario, if you've not invested any FIAT in a tax year and you don't withdraw any FIAT profits in the tax year, but you're trading crypto to crypto all the way through that tax year to increase your holdings of crypto, what the hell do we do then?

Revenue and the government really need to get their finger out and give comprehensive guidelines. I note in the post above that gives Michael Noonans view, he mentions Bitcoin only, is/was he even aware of the vast amount of other cryptos out there! Need to get Paschal Donohue's views on the matter now since the crypto world is more busy and vastly more populated with coins than it was when Noonan spoke.

AlmightyCushion

AlmightyCushion wrote: »

That isn't his argument (I have seen others make it though). His argument is that he should only pay tax once he sells more than his initial investment as only then has he made a profit. So given the scenario you posted, in his opinion he believes he should pay tax on €1,999,990 - €1,000 so €1,998,990. Then the remaining €10 worth of coin would be taxed as all profit when he sells it.

Exactly this and to me this is the obvious way it should work.

AlmightyCushion

Angel Dead Apartment wrote: »

Exactly this and to me this is the obvious way it should work.

It doesn't though. The way GreeBo describes it is the way it works. A coin/share/property/bar of gold/etc you bought for €X, you have just sold for €Y. It makes sense that your profit in this case is Y - X regardless of how many coins/shares/property/gold/etc you bought originally. If someone buys 10 houses for €200,000 each and then a few years later sells 1 for €400,000, do you think they should pay no tax on that house they sold because they haven't re-couped their initial €2m investment?

Fakent.ie

AlmightyCushion wrote: »

It doesn't though. The way GreeBo describes it is the way it works. A coin/share/property/bar of gold/etc you bought for €X, you have just sold for €Y. It makes sense that your profit in this case is Y - X regardless of how many coins/shares/property/gold/etc you bought originally. If someone buys 10 houses for €200,000 each and then a few years later sells 1 for €400,000, do you think they should pay no tax on that house they sold because they haven't re-couped their initial €2m investment?

Hes not saying that, he said if he takes out his entire investment and is only using the money he left in "all profit" the next time he takes anything out he will be taxed on everything and won't claim that left some of his investment in.

If i wanted to contact the revenue to confirm more about this how should I contact, go into them ,email or telephone?

Dades

In that situation he money you take out then is seen as profit, which makes sense. If you still have the amount you invested - still invested - then the rest IS profit.

The fact that you are able to take money out and leave your investment amount in shows a profit has been made.

sunrainmooncl

Is calculating CGT on crypto definitely FIFO? The revenue website says:

"Special rules apply if you are calculating CGT on gains made from disposal of shares"

"First In, First Out (FIFO)
If you hold shares of the same class (for example, ordinary shares) which you acquired at different dates, the oldest shares are treated as being sold first."

Edit: Revenue also says

When calculating your CGT liability, you may deduct the following items:

the cost of purchasing the asset
any money spent by you which adds value to the asset (known as 'enhancement expenditure')
costs (for example, fees paid by you to a solicitor or auctioneer) when you acquired and disposed of the asset.

Cryptonovice

I sent an enquiry 20 days ago relating to this..They say it takes 20-25 days to answer query’s through PAYE anytime..Rang today..asked question..said I’ll get someone to answer your query electronically soon

Fakent.ie

Cryptonovice wrote: »

I sent an enquiry 20 days ago relating to this..They say it takes 20-25 days to answer query’s through PAYE anytime..Rang today..asked question..said I’ll get someone to answer your query electronically soon

so id say theirs no point in me ringing or emailing myself because ill be waiting a month?

.G.

Time is something we have plenty off! Best to get an answer yourself personally unique to your own queries so that you have that answer to fall back on if they start asking questions of you down the line!

Cryptonovice

No no do ring..I made the mistake of saying I sent in an enquiry that wasn’t answered..and operator then said ok we will answer it through PAYE anytime..Probably best to have something in writing anyway...for the judge!!

thegolfer

Interesting developments in the UK.

Ireland would be aligned very roughly with UK tax laws, and wonder if there are similar avenues here for such application of tax laws to incomes from crypto.


http://www.telegraph.co.uk/news/2018/01/20/revealed-tax-free-bitcoin-loophole-could-cost-treasury-millions/

crowseye

Hi, does anyone have the name of an accountant that has any clue about crypto, struggling to find one myself would really appreciate any pointers towards a good one, PM me if you can point me in the right direction, thanks!

lifeandtimes

thegolfer wrote: »

Interesting developments in the UK.

Ireland would be aligned very roughly with UK tax laws, and wonder if there are similar avenues here for such application of tax laws to incomes from crypto.


http://www.telegraph.co.uk/news/2018/01/20/revealed-tax-free-bitcoin-loophole-could-cost-treasury-millions/

With the amount of people doing it and the fact that companies give whitepapers and announcements etc they'll tax the hell out of it and won't consider it gambling

barneystinson

lifeandtimes wrote: »

With the amount of people doing it and the fact that companies give whitepapers and announcements etc they'll tax the hell out of it and won't consider it gambling

Well do you consider it gambling?

You can't have it every way...

lifeandtimes

barneystinson wrote: »

Well do you consider it gambling?

You can't have it every way...

I personally do.

It's gambling the same way in knowing how a team or horses form is et but also like stock trading by knowing how a company is financially or acquisitions they plan on doing

But the government will see it as a chance to make money and will find some way to tax it as something other than gambling

Halflifept

They must simplify the way this is done, something like "money in - money out".
Its an impossible task to track all the trades made.

From my understanding people do want to follow the law but this has to be simple, easy and clear for the sake of all involved parts.

GreeBo

Halflifept wrote: »

They must simplify the way this is done, something like "money in - money out".
Its an impossible task to track all the trades made.

From my understanding people do want to follow the law but this has to be simple, easy and clear for the sake of all involved parts.

Why do you think it should be easier for crypto than it is for shares?

lifeandtimes

GreeBo wrote: »

Why do you think it should be easier for crypto than it is for shares?

Because they are not the same and the revenue haven't confirmed they are to be taxed the same. Not only that many other countries don't treat them the same

Crypto is crypto, shares are fiat that can be used and transferred as such

You throughout this thread have always taken the hardball approach to this. Wouldnt you be happier as a crypto trader that this would make it easier for you to pay tax?

Halflifept

GreeBo wrote: »

Why do you think it should be easier for crypto than it is for shares?

All the average joe is in cryptocurrency with the media buzz in the last few months, this will create lots of problems down the road.

Revenue should be clear in what is the "disposal". Disposal for crypto should have been the direct conversion of cryptocurrency to fiat when cashing out.

Treating crypto as a share restrains its usage as a coin.

barneystinson

Halflifept wrote: »

All the average joe is in cryptocurrency with the media buzz in the last few months, this will create lots of problems down the road.

Revenue should be clear in what is the "disposal". Disposal for crypto should have been the direct conversion of cryptocurrency to fiat.

Treating crypto as a share restrains its usage as a coin.

It's not a question of recognising it as a "share". Each different type of cryptocurrency is an asset.

When you buy a BTC then you have a BTC.

If you use some of your BTC to acquire ETH, you have disposed of some of your BTC.

That's hardly rocket science.

If they were all one homogenous asset, indistinguishable from each other, why would you be trading one for another...

barneystinson

It seems like a lot of posters on here are blissfully unfamiliar with the concept of special pleading... (https://en.m.wikipedia.org/wiki/Special_pleading)

lifeandtimes

barneystinson wrote: »

It seems like a lot of posters on here are blissfully unfamiliar with the concept of special pleading... (https://en.m.wikipedia.org/wiki/Special_pleading)

"claims to data that are inherently unverifiable, perhaps because too remote or impossible to define clearly
Example: Cocaine use should be legal. Like all drugs, it does have some adverse health effects, but cocaine is different from other drugs. Many have benefited from the effects of cocaine."

More and more countries are legalizing marijuana for its health benefits.

So maybe crypto can fall into this category of special pleading that's the exception to the rule.. ..like marijuana?

barneystinson

lifeandtimes wrote: »

"claims to data that are inherently unverifiable, perhaps because too remote or impossible to define clearly
Example: Cocaine use should be legal. Like all drugs, it does have some adverse health effects, but cocaine is different from other drugs. Many have benefited from the effects of cocaine."

More and more countries are legalizing marijuana for its health benefits.

So maybe crypto can fall into this category of special pleading that's the exception to the rule.. ..like marijuana?

Thanks, you have beautifully illustrated that you don't understand :pac:

Peregrinus

Halflifept wrote: »

They must simplify the way this is done, something like "money in - money out".
Its an impossible task to track all the trades made.

It's not impossible. If you make a lot of trades, it's a lot of work, but it's not impossible work.

More to the point, it's work you'll be doing anyway, if you have any interest in knowing which of your trades have been advantageous and which have not. The CGT system is set up on the assumption that investors are sane and rational. They are less concerned about making things easy for the irrational investors, who make investments but have no interest in how they turn out.

lifeandtimes wrote: »

Because they are not the same and the revenue haven't confirmed they are to be taxed the same. Not only that many other countries don't treat them the same.

Nobody is suggesting that crypto is taxed the same as shares; they are suggesting that crypto is taxed the same as other assets. Shares are just an example of another asset, but there's nothing magic about shares.

If you want a closer parallel, trading in crypto is treated like trading in foreign currencies. You invest in (say) Japanese Yen because you expect it to appreciate; then when you reckon Yen has peaked you sell your Yen for (say) US dollars because you like the investment characteristics of the US dollar. The disposal of your Yen is treated as a disposal for CGT purposes. The expectation is that a disposal of (say) BTC for ETH will receive similar CGT treatment because, basically, there is no reason either in law or common sense for it to be treated differently.

lifeandtimes wrote: »

Crypto is crypto, shares are fiat that can be used and transferred as such.

Shares are not fiat. They are they exact opposite of fiat.

Halflifept wrote: »

Treating crypto as a share restrains its usage as a coin.

I doubt that. Treating foreign currencies the same way doesn't stop them being used as currency.

But, in fact, cryptocurrencies are very little used as currency and, as the investment market has grown, their use as currency has been declining. The price is too unstable, and the settlement of transactions too slow, for crypto to be attractive as currencies.

smacl

Peregrinus wrote: »

But, in fact, cryptocurrencies are very little used as currency and, as the investment market has grown, their use as currency has been declining. The price is too unstable, and the settlement of transactions too slow, for crypto to be attractive as currencies.

If crypto is going to thrive long term, I'd expect that to change. Quite a number of the alternatives to bitcoin are there primarily to facilitate fast transactions, and as a technology it is gaining traction. When and if this happens, I can see it being a nightmare for the Revenue to pursue CGT as those holding crypto use crypto and simply won't change back to fiat. No doubt it will get regulated over time, but I'd say there could be a few wild west years between this and then.

GreeBo

Halflifept wrote: »

All the average joe is in cryptocurrency with the media buzz in the last few months, this will create lots of problems down the road.

Revenue should be clear in what is the "disposal". Disposal for crypto should have been the direct conversion of cryptocurrency to fiat when cashing out.

Treating crypto as a share restrains its usage as a coin.

But none of those arguments have anything to do with revenue or paying tax?

Also, why would the government care that CGT restricts usage of an asset that they have no involvement in?

GreeBo

lifeandtimes wrote: »

Because they are not the same and the revenue haven't confirmed they are to be taxed the same. Not only that many other countries don't treat them the same

Crypto is crypto, shares are fiat that can be used and transferred as such

I am not saying they are the exact same, my point is that when trading shares the obligation is on you to keep track of each transaction, hence, thats not an argument as to why crypto should be different.

"its really hard to keep track and I dont want to" isnt a valid argument when thousands of traders are already tracking millions of transactions and reporting on them.

lifeandtimes wrote: »

You throughout this thread have always taken the hardball approach to this. Wouldnt you be happier as a crypto trader that this would make it easier for you to pay tax?

I'd love nothing more than crypto to be tax free, but so far I havent seen anything official that would lead me to believe that it should be treated any differently than when trading other assets, notably shares.