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Can we pool our knowledge regarding TAX and crypto and make some kind of FAQ/sticky?
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That is perfectly good enough to declare, but not for an audit.
The individual transactions are proof of how you ended up with the total gain/loss at the end. Otherwise you could, yunno, lie.
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Well that makes more sense, I just got the impression from posts that you would be expected to detail every trade on your tax return rather than just have a record of it hence why I've being going on about it a bit in my last few posts.0 -
Angel Dead Apartment wrote: »Well that makes more sense, I just got the impression from posts that you would be expected to detail every trade on your tax return rather than just have a record of it hence why I've being going on about it a bit in my last few posts.
Thats the whole point about self declaration.
You can declare whatever you want, but if someone asks for proof you need to be able to provide it.
So you might still need that detail, in case of an audit.
Also, revenue can go back *years* in an audit, especially if they have reason to believe you are hiding something, or they audit last year and discover you unreported.
CGT is 30%, sure its a balls, but if you make 10K, pay 3K and you are still up 7K for clicking a few buttons.0 -
That's been the disconnect on this thread, alright (I probably haven't helped...)Angel Dead Apartment wrote: »Well that makes more sense, I just got the impression from posts that you would be expected to detail every trade on your tax return rather than just have a record of it hence why I've being going on about it a bit in my last few posts.
The numbers Cybil Servant is hoping to see on your form 12, and all the data you should hang on to just in case are a little different.0 -
In my case, I've lost track of my transactions but converted everything back to euro in December so paying on the basis of money then minus money in. Hopefully it's sufficient. I'm tracking all trades now so this doesn't happen again.0
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one scenario....hypothetical
I buy one bitcoin last Apr for 1000.... I buy another bitcoin for 14k in november.
I then trade one bitcoin for ripple which increases 200%... i then cash out for 42k (hope my maths is right)... keeping one bitcoin on my wallet
do i use the second bitcoin purchase in my cgt calculation or the first? given the fact that i use the second purchase (in my mind) to buy the ripple
42k - 14 / 3 = 9.3k
or
42k - 1 / 33 = 13.530 -
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Its generally accepted that you use FIFO for any calculations.one scenario....hypothetical
I buy one bitcoin last Apr for 1000.... I buy another bitcoin for 14k in november.
I then trade one bitcoin for ripple which increases 200%... i then cash out for 42k (hope my maths is right)...
do i use the second bitcoin purchase in my cgt calculation or the first? given the fact that i use the second purchase (in my mind) to buy the ripple
42k - 14 / 3 = 9.3k
or
42k - 1 / 33 = 13.53
In the absence of anything specific to crypto, the guidelines for disposal of shares specifically says to use FIFO.
In practice you typically end up at or very near the same place. (you will be disposing of all the shares eventually)0 -
This thread is turning out to be what I feared - total speculation. And by people who write with a tone of authority.
The reality is that NOBODY KNOWS how Revenue will treat crypto. As I mentioned right back in the first post that kicked off the thread, there are lots of opinions, and you only have to look at other countries to see the variety of opinions out there. What people here have been proposing is reasonable and probable, but we shouldn't take it as a fait accompli. For example, I still think there is a strong argument to be made for like-for-like exchanges when using e.g. BTC to buy ADA (as you can't buy ADA with EUR yet, as far as I know).
Add to that the complexity of ICOs, gift coins and forks (not to mention mining and the madness of leveraged trading), and I just can't accept the way some people here speak with such authority. Just be honest: you don't actually know. This stuff is up for debate, and if enough people put their heads together, arguments can be put together for taking a different approach to tax. Not just "crypto is the same as shares" or "crypto is the same as property" (a claim I've seen elsewhere).0 -
Its generally accepted that you use FIFO for any calculations.
In the absence of anything specific to crypto, the guidelines for disposal of shares specifically says to use FIFO.
In practice you typically end up at or very near the same place. (you will be disposing of all the shares eventually)
how can that make sense though if i bought the second coin directly to buy ripple/other alt coin...0 -
This thread is turning out to be what I feared - total speculation. And by people who write with a tone of authority.
The reality is that NOBODY KNOWS how Revenue will treat crypto. As I mentioned right back in the first post that kicked off the thread, there are lots of opinions, and you only have to look at other countries to see the variety of opinions out there. What people here have been proposing is reasonable and probable, but we shouldn't take it as a fait accompli. For example, I still think there is a strong argument to be made for like-for-like exchanges when using e.g. BTC to buy ADA (as you can't buy ADA with EUR yet, as far as I know).
Add to that the complexity of ICOs, gift coins and forks (not to mention mining and the madness of leveraged trading), and I just can't accept the way some people here speak with such authority. Just be honest: you don't actually know. This stuff is up for debate, and if enough people put their heads together, arguments can be put together for taking a different approach to tax. Not just "crypto is the same as shares" or "crypto is the same as property" (a claim I've seen elsewhere).
I tend to agree with you that nobody knows really...but it doesnt help people trying to pay their tax.... like in my example above... will they nail me a few years down the line because i choose the lesser tax value (given i explicitly bought the coin to buy the alt coin)0 -
This thread is turning out to be what I feared - total speculation. And by people who write with a tone of authority.
The reality is that NOBODY KNOWS how Revenue will treat crypto. As I mentioned right back in the first post that kicked off the thread, there are lots of opinions, and you only have to look at other countries to see the variety of opinions out there. What people here have been proposing is reasonable and probable, but we shouldn't take it as a fait accompli. For example, I still think there is a strong argument to be made for like-for-like exchanges when using e.g. BTC to buy ADA (as you can't buy ADA with EUR yet, as far as I know).
Add to that the complexity of ICOs, gift coins and forks (not to mention mining and the madness of leveraged trading), and I just can't accept the way some people here speak with such authority. Just be honest: you don't actually know. This stuff is up for debate, and if enough people put their heads together, arguments can be put together for taking a different approach to tax. Not just "crypto is the same as shares" or "crypto is the same as property" (a claim I've seen elsewhere).
Ye really annoys me when i get them stale old replies, like we've all heard it before think of something else to tell me please...........0 -
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This thread is turning out to be what I feared - total speculation. And by people who write with a tone of authority.
The reality is that NOBODY KNOWS how Revenue will treat crypto. As I mentioned right back in the first post that kicked off the thread, there are lots of opinions, and you only have to look at other countries to see the variety of opinions out there. What people here have been proposing is reasonable and probable, but we shouldn't take it as a fait accompli. For example, I still think there is a strong argument to be made for like-for-like exchanges when using e.g. BTC to buy ADA (as you can't buy ADA with EUR yet, as far as I know).
Add to that the complexity of ICOs, gift coins and forks (not to mention mining and the madness of leveraged trading), and I just can't accept the way some people here speak with such authority. Just be honest: you don't actually know. This stuff is up for debate, and if enough people put their heads together, arguments can be put together for taking a different approach to tax. Not just "crypto is the same as shares" or "crypto is the same as property" (a claim I've seen elsewhere).
Why do you think basic crypto trading will be treated any differently than any other currency trading?
If you have something from revenue.ie that implies this then please share.
Otherwise I cant see any logic reason why you are refusing to follow the rules that have been explained countless times here already AND on the revenue.ie site.
Because thats how it works.how can that make sense though if i bought the second coin directly to buy ripple/other alt coin...
In any case, as above, it usually ends up pretty much in the same place.
You are going to have to dispose of that first coin eventually, right?-Ye really annoys me when i get them stale old replies, like we've all heard it before think of something else to tell me please...........
You are getting the same answers because you are asking the same question.
It feels like a lot of posters are waiting to be told "Good news, its all free, no tax to pay, hurray!"
Seriously, I'd absolutely *LOVE* to not have to pay CGT on my gains, but no one here seems to be able to give a single reason as to why that would be the case.0 -
Because thats how it works.
In any case, as above, it usually ends up pretty much in the same place.
You are going to have to dispose of that first coin eventually, right?-
FIFO doesnt make any sense in cryptos because BTC is usually the on ramp to buy other alts....
If i want to buy 100ks worth of alt coin i shouldnt be penalised on cgt for a coin i bought 2 years ago at 1k.... when i can show i deposited 100k worth of btc just before my alt coin trade....
can you tell me for sure thats how its going to be interpreted by revenue?...
also you aint been in cryto long if you think it usually all end ups in the same place0 -
Thats no different than having to buy USD before you can buy Pesos for example.FIFO doesnt make any sense in cryptos because BTC is usually the on ramp to buy other alts....
If i want to buy 100ks worth of alt coin i shouldnt be penalised on cgt for a coin i bought 2 years ago at 1k.... when i can show i deposited 100k worth of btc just before my alt coin trade....
How are you being "penalized" exactly?
I can tell you whats published on revenue.ie and what the last Minister for Finance who commented on the matter said.can you tell me for sure thats how its going to be interpreted by revenue?...
You have on idea how long I have been in crytpo, but in any case, I have no idea what that point means. I suspect you dont understand my point.also you aint been in cryto long if you think it usually all end ups in the same place
The coin you believe you are being "punished" for selling will have to be disposed of at some stage, right? Would you prefer a LIFO situation where you dispose of that first coin in 5 years time but for whatever reason CGT on crypto is 50%?
I'm sure you'd complain about that too.
Make your declaration using LIFO all you want, but once you pick LIFO you are LIFO for life.0 -
Why do you think basic crypto trading will be treated any differently than any other currency trading?
If you have something from revenue.ie that implies this then please share.
Otherwise I cant see any logic reason why you are refusing to follow the rules that have been explained countless times here already AND on the revenue.ie site.
well to be fair, the stock exchange has been around for 100s of years and the legislation drafted by the government back then and implamented by revenue would certianly predate anything that is happening right with the cryptocurrency world. Its certianly an argument for revenue to clearly define how and what they wish for tax to be paid on and what is required of the traders.
New legislation or at least amendments may be on the cards possibly based off previous stock trading revenue information
There are many ways to skin a cat but not all cats are the same
Also sorry OP, i know you wanted this to be an actual matter of fact sticky but the truth is not one person here can with certanty clarify this matter0 -
Im being penalised because i'm liable for cgt 'at the time' i make the trade... This means i need to include it at the end of that years taxes... If its LIFO i only worry about that if i sell the alts (that could be in two years time)How are you being "penalized" exactly?I can tell you whats published on revenue.ie and what the last Minister for Finance who commented on the matter said.
Has he been quoted FIFO ?... if so can you link me to where he says it as id like it verified (better if Revenue could actually state this)You have on idea how long I have been in crytpo, but in any case, I have no idea what that point means. I suspect you dont understand my point.
The coin you believe you are being "punished" for selling will have to be disposed of at some stage, right? Would you prefer a LIFO situation where you dispose of that first coin in 5 years time but for whatever reason CGT on crypto is 50%?
I'm sure you'd complain about that too.
Make your declaration using LIFO all you want, but once you pick LIFO you are LIFO for life.
Yes it will be disposed of eventually and what ever the rate is, it is..... but it will be my choice to dispose of it when i want.... not have it automatically disposed of by another trade0 -
So far, the only people who seem to find anything "destablising" or "unwelcome" are those investors in crypto who are horrified to find that the same rules apply to the taxation of gains arising on the disposal of cryptocurrencies as apply to gains arising on the disposal of other assets, and that record-keeping and compliance can be a pain.ZeroThreat wrote: »Edit : I guess cryptocurrencies have really opened a can of worms in relation to taxation. The problem is that the barriers to (potential) high yield investments have been lowered, so the common man is now getting in on the game, and unlike the educated upper class middle professionals of the past who had a stockbroking account, solicitor and personal accountant these upstarts are clueless about their duties to the state and ignorant of the basic laws of the land.
The distribution of money in society may be shifting which is destabilising and unwelcome to the people who run the country.
I have news for you, people. Tax compliance is always a pain. Deal with it.0 -
I still dont see how its you being "punished" tbh.Im being penalised because i'm liable for cgt 'at the time' i make the trade... This means i need to include it at the end of that years taxes... If its LIFO i only worry about that if i sell the alts (that could be in two years time)
Even with LIFO, you are going to dispose of that first BTC at some stage, whether to buy ALT or back to FIAT.
https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/how-to-calculate-cgt.aspxHas he been quoted FIFO ?... if so can you link me to where he says it as id like it verified (better if Revenue could actually state this)
FIFO for shares, nothing specific for crypto.Yes it will be disposed of eventually and what ever the rate is, it is..... but it will be my choice to dispose of it when i want.... not have it automatically disposed of by another trade
So earlier simply keeping track of trades was a problem, now you want to uniquely identify coins or portions of coins? Best of luck tracking that tbh!
Either way, declare via LIFO or FIFO, the fact that you have to declare doesnt go away.0 -
Peregrinus wrote: »So far, the only people who seem to find anything "destablising" or "unwelcome" are those investors in crypto who are horrified to find that the same rules apply to the taxation of gains arising on the disposal of cryptocurrencies as apply to gains arising on the disposal of other assets, and that record-keeping and compliance can be a pain.
I have news for you, people. Tax compliance is always a pain. Deal with it.
+1
Why do posters here think people pay millions to accountants every year?0 -
Unless you can point to some provision in the Capital Gains Tax Act to support the view that exchanges of these two assets are treated differently from exchanges of other assets, I don't think you have a strong argument. I don't think you have any argument at all, to be honest.This thread is turning out to be what I feared - total speculation. And by people who write with a tone of authority.
The reality is that NOBODY KNOWS how Revenue will treat crypto. As I mentioned right back in the first post that kicked off the thread, there are lots of opinions, and you only have to look at other countries to see the variety of opinions out there. What people here have been proposing is reasonable and probable, but we shouldn't take it as a fait accompli. For example, I still think there is a strong argument to be made for like-for-like exchanges when using e.g. BTC to buy ADA (as you can't buy ADA with EUR yet, as far as I know).
The advice that's being given "with a tone of authority" in this thread is basically this; gains arising on the disposal of cryptocurrency holdings will be taxed in exactly the same way as gains arising on the disposal of other assets, because there is nothing in the CGT Act to say otherwise.
That advice could be wrong, but anyone actually having a gain arising on disposal and wishing to address the tax consequences of that would be wise to treat the advice as correct. Revenue will not penalise you for doing so. If you really, really want the advice to be wrong (e.g. if that would produce a significantly better tax outcome for you) well, fine; calculate and pay your tax on the basis that you think is correct, assemble your arguments, advise the Revenue of the basis on which you have calculated, paid and reported your tax, and prepare for a hearing before the Appeal Commissioners.0 -
I still dont see how its you being "punished" tbh.
Even with LIFO, you are going to dispose of that first BTC at some stage, whether to buy ALT or back to FIAT.
Never said i was being punished.... i guess i meant penalised time wise as FIFO means that i need to file a tax return this year instead of when the actual trade is cashed in....
also consider the 100k purchase is now 60k..... a loss of 40k on my trade... FIFO would still see this as a 59 profit if my first coin was 1k.... how is that fair?https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/how-to-calculate-cgt.aspx
FIFO for shares, nothing specific for crypto.
will take a read
i never said keeping track of trades was a problem for me.So earlier simply keeping track of trades was a problem, now you want to uniquely identify coins or portions of coins? Best of luck tracking that tbh!
Either way, declare via LIFO or FIFO, the fact that you have to declare doesnt go away.
btw...im glad there is good debate on this...0 -
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You would need to file this year anyway.Never said i was being punished.... i guess i meant penalised time wise as FIFO means that i need to file a tax return this year instead of when the actual trade is cashed in....
You went EUR - BTC - ALT
Hence you disposed of BTC, hence you need to file CGT.also consider the 100k purchase is now 60k..... a loss of 40k on my trade... FIFO would still see this as a 59 profit if my first coin was 1k.... how is that fair?
You realised a gain when you dispose of BTC #1 to buy 100k worth of ALTS.
If they are now worth 60K and you dispose of them you have realized a capital loss of 40K which you can use to write off against any capital gains.
If your 100K portfolio is worth 60K, it doesnt matter what currency or which individual coins you used to make the purchase, its a loss.
What if your first BTC was bought at 10K and now BTC is 1K per coin and you want to buy some ALTS?
If you use the first coin then you can offset any gains from the alts against your 9K BTC loss....using your method you cant.0 -
You would need to file this year anyway.
You went EUR - BTC - ALT
Hence you disposed of BTC, hence you need to file CGT.
You realised a gain when you dispose of BTC #1 to buy 100k worth of ALTS.
If they are now worth 60K and you dispose of them you have realized a capital loss of 40K which you can use to write off against any capital gains.
If your 100K portfolio is worth 60K, it doesnt matter what currency or which individual coins you used to make the purchase, its a loss.
What if your first BTC was bought at 10K and now BTC is 1K per coin and you want to buy some ALTS?
If you use the first coin then you can offset any gains from the alts against your 9K BTC loss....using your method you cant.
good point.... i guess until there's a firm detail on cryptos from Revenue people are going to be using all sorts of calculations to come up with what the owe....0 -
What if you don't ever look at the fiat value then you really don't have any idea how much your crypto is worth so how can they tax you0
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I may be misunderstanding you, jobless, or you may be misunderstanding how this works.
Suppose, in Year 1, you buy a holding of Crypto A for 5 k.
By year 2 the price has doubled, so your holding is now worth 10K. Your reckon you're on to a good thing, so you buy the same amount again, so you now have 20K worth.
In year 3, the price has doubled again, so you are holding 40k worth of Crypto A.
UP to this point, you have never disposed of anything, so you have never incurred a liablity to CGT.
You now wish to buy 25k of Crypto B. How are you going to finance this purchase?
If you finance it with 25k cash that you happen to have, there is still no disposal, and therefore no CGT.
However, if you sell 25k worth of Crypto A, that's a disposal, and there'll be a CGT liability.
The FIFO rule comes in at this point, since we need to identify the acquisition cost of the Crypto A you dispose of.
Basically, the FIFO rule applies whenever you dispose part of a holding of "fungible" assets. Fungibles assets are assets where nobody cares about the identity of the individual asset. If I lend you ten euros till Saturday, I don't expect the same euro banknote back; I'll be quite happy with a different 10-euro note. Similarly if I lend you a cup of sugar. Foreign currency holdings, tradable securities, grain, potatoes, gold - they're all fungbles. Cryptocurrencies are also fungibles. (They wouldn't be of much use or credibility as currencies if they weren't).
And the FIFO rule says, basically, if you dispose of some but not all of a holding of fungible assets that you acquired at different times, you are deemed to dispose first of all of the ones you acquired first. So in this case, of the 25k worth of Crypto A that you dispose of, 20k will be taken to represent the Crypto A that you acquired in Year 1, and the remaining 5k will come from the Crypto you acquired in Year 2, and your CGT will be calculated on that basis.
This gives you a higher gain (and therefore a higher tax bill) than a LIFO rule would, but this is only so because the price went up between Year 1 and Year 2. If the price had gone down between Year 1 and Year 2, the FIFO rule would work to your advantage. For obvious reasons, it would not be good tax policy to let you choose whichever treatment is most advantageous to you in relation to any disposal, so the system insists on a uniform rule being applied, regardless of whether it works well or badly for you in any particular instance. That rule happens to be FIFO. And note that you would have to file a return in any year in which you made a disposal, regardless of whether FIFO or LIFO applied.0 -
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Your playslip is in fiat not crypto...Peregrinus wrote: »"Well, if you never look at your payslip you really don't have any idea how much you earn, so how can they tax you?"0 -
Yes, but whether you look at the value of crypto or not doesn't change the fact that they have a value, and your CGT liablity is based on that value. Your liablity to CGT is unaffected by your decision not to look at the value of your crypto.0
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Peregrinus wrote: »Yes, but whether you look at the value of crypto or not doesn't change the fact that they have a value, and your CGT liablity is based on that value. Your liablity to CGT is unaffected by your decision not to look at the value of your crypto.
Whats there wallet ill send them it in doge...
It doesn't make sense that you pay the taxes on that at the end of the year what if January 1st it drops to 0 and you've never actually witnessed a gain in euros..0 -
Peregrinus wrote: »I may be misunderstanding you, jobless, or you may be misunderstanding how this works.
Suppose, in Year 1, you buy a holding of Crypto A for 5 k.
By year 2 the price has doubled, so your holding is now worth 10K. Your reckon you're on to a good thing, so you buy the same amount again, so you now have 20K worth.
In year 3, the price has doubled again, so you are holding 40k worth of Crypto A.
UP to this point, you have never disposed of anything, so you have never incurred a liablity to CGT.
You now wish to buy 25k of Crypto B. How are you going to finance this purchase?
If you finance it with 25k cash that you happen to have, there is still no disposal, and therefore no CGT.
However, if you sell 25k worth of Crypto A, that's a disposal, and there'll be a CGT liability.
The FIFO rule comes in at this point, since we need to identify the acquisition cost of the Crypto A you dispose of.
Basically, the FIFO rule applies whenever you dispose part of a holding of "fungible" assets. Fungibles assets are assets where nobody cares about the identity of the individual asset. If I lend you ten euros till Saturday, I don't expect the same euro banknote back; I'll be quite happy with a different 10-euro note. Similarly if I lend you a cup of sugar. Foreign currency holdings, tradable securities, grain, potatoes, gold - they're all fungbles. Cryptocurrencies are also fungibles. (They wouldn't be of much use or credibility as currencies if they weren't).
And the FIFO rule says, basically, if you dispose of some but not all of a holding of fungible assets that you acquired at different times, you are deemed to dispose first of all of the ones you acquired first. So in this case, of the 25k worth of Crypto A that you dispose of, 20k will be taken to represent the Crypto A that you acquired in Year 1, and the remaining 5k will come from the Crypto you acquired in Year 2, and your CGT will be calculated on that basis.
This gives you a higher gain (and therefore a higher tax bill) than a LIFO rule would, but this is only so because the price went up between Year 1 and Year 2. If the price had gone down between Year 1 and Year 2, the FIFO rule would work to your advantage. For obvious reasons, it would not be good tax policy to let you choose whichever treatment is most advantageous to you in relation to any disposal, so the system insists on a uniform rule being applied, regardless of whether it works well or badly for you in any particular instance. That rule happens to be FIFO. And note that you would have to file a return in any year in which you made a disposal, regardless of whether FIFO or LIFO applied.
thanks for the explanation.....
I guess my issue is with the part where you say
You now wish to buy 25k of Crypto B. How are you going to finance this purchase?
with cryptos at the moment, the only one ramp to do the trade is through Bitcoin, Litecoin or Ethereum really.... i dont have the option to buy the Crypto B with cash....
so if i wish to but Crypto B and already have some btc its forcing the cgt event on you....
the only other option is to buy ETH, or Litecoin if you dont have any and buy them through that but similarly if you have any of this bought from a long time ago the cgt event arises0 -
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You only pay taxes at the end of the year for coins you have disposed of.Whats there wallet ill send them it in doge...
It doesn't make sense that you pay the taxes on that at the end of the year what if January 1st it drops to 0 and you've never actually witnessed a gain in euros..
What if you buy shares and the company tanks a year later?
What it you convert it to USD and the USD EUR rate tanks?
What if you move it all to your bank and withdraw it but get mugged outside the bank without ever getting a chance to spend it?
Welcome to the big bad world!;)0
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