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

GreeBo

GreeBo wrote: »

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?

Why are other counties deciding it should not be taxed? These governments obviously see crypto as a different thing and feel it should be excluded from tax treatment. What makes you so sure you are right when there are multiple governments who would disagree with you.

*when I say "you are right" I mean in how you feel crypto should be treated as opposed to how revenue here will treat it. You feel dry strongly (for some reason unknown to me) that it should be taxed like a normal asset, this feeling is not held by an awful lot of people.

GreeBo

Angel Dead Apartment wrote: »

Why are other counties deciding it should not be taxed? These governments obviously see crypto as a different thing and feel it should be excluded from tax treatment. What makes you so sure you are right when there are multiple governments who would disagree with you.

*when I say "you are right" I mean in how you feel crypto should be treated as opposed to how revenue here will treat it. You feel dry strongly (for some reason unknown to me) that it should be taxed like a normal asset, this feeling is not held by an awful lot of people.

Actually I never said that at all.

I havent comment on how *I personally think* crypto *should* be treated. This is supposed to be a thread on facts to help people pay and file correctly.
Giving my personal opinion is only going to muddy the already murky waters.

I have only posted my interpretation of the published revenue.ie guidelines.

Others posting how they personally feel crypto should be dealt with is just confusing the issue and should be in a separate thread.

Halflifept

Getting back on track of the topic on filling the taxes.

Are we supposed to fill the form12 or separately with the CGT 2017 form (2017 form not yet available) ?

ZeroThreat

Angel Dead Apartment wrote: »

Why are other counties deciding it should not be taxed? These governments obviously see crypto as a different thing and feel it should be excluded from tax treatment. What makes you so sure you are right when there are multiple governments who would disagree with you.

*when I say "you are right" I mean in how you feel crypto should be treated as opposed to how revenue here will treat it. You feel dry strongly (for some reason unknown to me) that it should be taxed like a normal asset, this feeling is not held by an awful lot of people.

It doesn't really matter how other countries governments see crypto though, all that matters on this thread is how crypto is taxed in Ireland.

It's not like this country follows the rest of Europe or other parts of the world in relation to corporation tax for example now, is it? ;

Our basic tax strategy is to keep taxes as low as possible (in some cases almost non existent) to attract large multinational business to provide as many jobs as possible, while the tax shortfall into the gov. coffers is mitigated by making taxation heavier in other areas of taxation - ie. very low income threshold (by european standards) before a worker is taxed in the higher band, CGT (we're at the higher end of this EU wise, I think only Denmark has a higher rate and we're tied next with France), tiny annual exempt allowance for captial gains (hasn't changed in decades afaik) VRT, higher excise rates, not sure about VAT but I'd say we're above the average EU rate.

Of course the very low CT rate strategy seems to be something of a one trick pony, but it's prevented mass emigration so far at least...

ok, I've definitely strayed waaay off topic, just ignore the above.

thegolfer

Angel Dead Apartment wrote: »

Why are other counties deciding it should not be taxed? These governments obviously see crypto as a different thing and feel it should be excluded from tax treatment. What makes you so sure you are right when there are multiple governments who would disagree with you.

*when I say "you are right" I mean in how you feel crypto should be treated as opposed to how revenue here will treat it. You feel dry strongly (for some reason unknown to me) that it should be taxed like a normal asset, this feeling is not held by an awful lot of people.

Other countries are not deciding to not tax crypto, but rather it's most likely a defect in their legislation that does not allow the relevant country to tax those transactions....yet.

Ireland has defined assets already in legislation, which is fairly wide, where as other countries drafted legislation and definition of assets may be so specific that is has excluded such crypto assets, and thus not taxable.

As other posters here have pointed out crypto trading is most likely similar to fx trading or share dealing, in that the underlying asset is acquired and disposed of at a gain or loss, and tracked.

Due to CGT legislation being widely drafted, it applies to multiple scenarios, and not just narrowed down specifics that suit you.

Noctifer

What about fees that are paid when buying and selling crypto, are those deductible?

machiavellianme

Halflifept wrote: »

Getting back on track of the topic on filling the taxes.

Are we supposed to fill the form12 or separately with the CGT 2017 form (2017 form not yet available) ?

I sent in the CGT payslip B and although I'm paye, I plan on submitting form CG1 as it says it is for people who do not usually submit annual tax returns. Form 12 seems to require a lot of information and has always been automatically been done for me in the past so I don't plan on messing that up. Form CG1 isn't due till Autumn so no hurry.

Halflifept

machiavellianme wrote: »

I sent in the CGT payslip B and although I'm paye, I plan on submitting form CG1 as it says it is for people who do not usually submit annual tax returns. Form 12 seems to require a lot of information and has always been automatically been done for me in the past so I don't plan on messing that up. Form CG1 isn't due till Autumn so no hurry.

Thanks. From what I've read from CG1 (2017) should be available on April/March and should be filled till August or October. Still time to do all the calculations splitting in the two time frames (Jan - Nov and Nov - Dec ).

Noctifer wrote: »

What about fees that are paid when buying and selling crypto, are those deductible?

fees are deductible,

What are the rules for calculating CGT?

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.



https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/how-to-calculate-cgt.aspx

Noctifer

I have seen that. The problem is that I am a day trader. As such, I end up paying a lot in fees. For example, I could end the day with a 20 euro gain, but end up paying 100 euros in fees. Last year I ended up earning over 10k, but I payed over 7k in fees. To me that sounds too good to be true as it would drasticly lower my taxable income from trading.

Fakent.ie

Noctifer wrote: »

I have seen that. The problem is that I am a day trader. As such, I end up paying a lot in fees. For example, I could end the day with a 20 euro gain, but end up paying 100 euros in fees. Last year I ended up earning over 10k, but I payed over 7k in fees. To me that sounds too good to be true as it would drasticly lower my taxable income from trading.

How did you work out you paid 7000 in fees?

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

Did they get back to you yet?

Noctifer

Fakent.ie wrote: »

Noctifer wrote: »

I have seen that. The problem is that I am a day trader. As such, I end up paying a lot in fees. For example, I could end the day with a 20 euro gain, but end up paying 100 euros in fees. Last year I ended up earning over 10k, but I payed over 7k in fees. To me that sounds too good to be true as it would drasticly lower my taxable income from trading.

How did you work out you paid 7000 in fees?

The exchange keeps records of all the transactions. I just summed up all the fees.

GreeBo

Noctifer wrote: »

I have seen that. The problem is that I am a day trader. As such, I end up paying a lot in fees. For example, I could end the day with a 20 euro gain, but end up paying 100 euros in fees. Last year I ended up earning over 10k, but I payed over 7k in fees. To me that sounds too good to be true as it would drasticly lower my taxable income from trading.

If you are day trading then CGT wouldn't apply, it would be income tax, right?

Fakent.ie

Noctifer wrote: »

The exchange keeps records of all the transactions. I just summed up all the fees.

What exchange do you use

Noctifer

Fakent.ie wrote: »

Noctifer wrote: »

The exchange keeps records of all the transactions. I just summed up all the fees.

What exchange do you use

GDAX

Noctifer

GreeBo wrote: »

Noctifer wrote: »

I have seen that. The problem is that I am a day trader. As such, I end up paying a lot in fees. For example, I could end the day with a 20 euro gain, but end up paying 100 euros in fees. Last year I ended up earning over 10k, but I payed over 7k in fees. To me that sounds too good to be true as it would drasticly lower my taxable income from trading.

If you are day trading then CGT wouldn't apply, it would be income tax, right?

Why? It's not a job.

Fakent.ie

Noctifer wrote: »

GDAX

I really cant understand how you paid 7k in fees

Noctifer

Fakent.ie wrote: »

Noctifer wrote: »

GDAX

I really cant understand how you paid 7k in fees

If you trade on a daily basis it adds up. There are days when I end up paying over 100 euro in fees yet make less than 20 euros.

Fakent.ie

Noctifer wrote: »

If you trade on a daily basis it adds up. There are days when I end up paying over 100 euro in fees yet make less than 20 euros.

The fees on gdax are really high. .25%?

Noctifer

Fakent.ie wrote: »

Noctifer wrote: »

If you trade on a daily basis it adds up. There are days when I end up paying over 100 euro in fees yet make less than 20 euros.

The fees on gdax are really high. .25%?

0.25% for BTC and 0.3% for other crypto.

Fakent.ie

Noctifer wrote: »

0.25% for BTC and 0.3% for other crypto.

Binance is only 0.05%

Noctifer

Fakent.ie wrote: »

Noctifer wrote: »

0.25% for BTC and 0.3% for other crypto.

Binance is only 0.05%

No Euro pairs though, not interested.

Fakent.ie

Noctifer wrote: »

No Euro pairs though, not interested.

its better to trade in bitcoin pairs, if you would like to know why dm me because I don't want to write about it in here its really off-topic

Noctifer

Fakent.ie wrote: »

Noctifer wrote: »

No Euro pairs though, not interested.

its better to trade in bitcoin pairs, if you would like to know why dm me because I don't want to write about it in here its really off-topic

I don't trust crypto. Fiat is secure, crypto is not.

Fakent.ie

Noctifer wrote: »

I don't trust crypto. Fiat is secure, crypto is not.

lololololol this guy must be a troll

Noctifer

Fakent.ie wrote: »

Noctifer wrote: »

I don't trust crypto. Fiat is secure, crypto is not.

lololololol this guy must be a troll

No. I only hold crypto while I can see the market. I don't hold over night or while at work.

Peregrinus

Noctifer wrote: »

I have seen that. The problem is that I am a day trader. As such, I end up paying a lot in fees. For example, I could end the day with a 20 euro gain, but end up paying 100 euros in fees. Last year I ended up earning over 10k, but I payed over 7k in fees. To me that sounds too good to be true as it would drasticly lower my taxable income from trading.

It drastically lowers your earnings from trading, and the CGT rules recognise this. On the figures you give, you didn't earn 10k last year; you earned 3k. (But see below for a discussion of whether you are calculating this correctly).

Noctifer wrote: »

The exchange keeps records of all the transactions. I just summed up all the fees.

Strictly speaking, the chargeable gain on each trade is the disposal proceeds minus (acquisition cost plus fees & expenses relating to that trade). So the correct procedure is to calculate the chargeable gain on each trade, taking account of associated fees, and them sum up all the chargeable gains.

Doing it the way you're doing it has the risk that you will claim deductions for fees incurred in connection with the acquisition of assets that you have not yet disposed of. These are not deductible until you dispose of the assets concerned.

GreeBo wrote: »

If you are day trading then CGT wouldn't apply, it would be income tax, right?

Noctifer wrote: »

Why? It's not a job.

It doesn't have to be a job; just a trade. There's a rather blurry line between making regular investment transactions, with investment gains subject to CGT, and carrying on a trade of dealing in assets, with the profits of the trade subject to income tax. Which side of the line you fall on depends on the method, frequency, system, etc with which you trade, but it doesn't depend on whether you are employed by someone to trade.

If you're in any doubt as to which side of the line you fall on, talk to an accountant. The revenue will generally prefer to treat you as investing, so if you want to be taxed as a trader you'll have to be prepared to argue for that.

Noctifer

Peregrinus wrote: »

Strictly speaking, the chargeable gain on each trade is the disposal proceeds minus (acquisition cost plus fees & expenses relating to that trade). So the correct procedure is to calculate the chargeable gain on each trade, taking account of associated fees, and them sum up all the chargeable gains.

Doing it the way you're doing it has the risk that you will claim deductions for fees incurred in connection with the acquisition of assets that you have not yet disposed of. These are not deductible until you dispose of the assets concerned.

Could you give me an example on how to correctly calculate it?

Here is a trade:

buy: 1 btc for 10000 with a fee of 25

sell: 1 btc for 10100 no fee.

I was thinking the gain in this case would be 100 euro and fees are 25 euro.

Also, a question regarding auditing. How exactly can revenue know that I correctly filled my taxes? I do most of my trading on GDAX. Would they request my trade history from them? Also, what happens in the case my account get's hacked (or the exchange) and I lose everything

Peregrinus

Noctifer wrote: »

Could you give me an example on how to correctly calculate it?

Here is a trade:

buy: 1 btc for 10000 with a fee of 25

sell: 1 btc for 10100 no fee.

I was thinking the gain in this case would be 100 euro and fees are 25 euro.

The chargeable gain is 75 euros.

But this is for just a single transaction. The picture is more complicated if you have more than one transaction for the year. Consider the following transactions:

Buy 10 Crypto A for 1,000, plus fee 25.
Buy 10 Crypto B for 200 plus fee 5.
Buy 10 Crypto C for 5,000 plus fee 125.
Sell 5 Crypto C for 7,500, no fee.
Sell 5 Crypto B for 100, no fee.

If you simply sum all the fees you paid during the year, they come to 155. But the bulk of that was not incurred in connection with the crypto that you sold. In calculating your capital gains, you can only deduct the expenses which relate to the assets you disposed of. Your calculation of chargeable gains is as follows:

Sold 5 Crypto C:
Acquisition cost 2,500 plus fee 62.50 = 2,562.50
Disposal proceeds 7,500
Chargeable capital gain: 4,937.50

Sold 5 Crypto B:
Acquisition cost 100 plus fee 2.50 = 102.50
Disposal proceeds 100
Deductible capital loss: 2.50

Chargeable gain less deductible loss: 4,935

Noctifer

My trades are buy and then sell of the same crypto. During a day I buy one crypto and in the same day I dispose of it. Some days I do this multiple times.

If I understand you correctly I add the fee to my initial purchase, so when I buy 1 btc for 10000 I add the 25 fee and that makes it as if I bought it with 10025.

What if I sell it with a fee. Let's say I sell 1 btc for 10100 and pay a fee of 25.25