Crypto tax situation - Read post 1 for thread banned users

Bob24 wrote: »

Other posters have explained clearly that GGT is due, but in case anyone still thinks exchanging one asset for another doesn’t trigger CGT, Revenue’s website is pretty clear (just read the bits I highlighted and it is crystal clear): https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx

What if I lost my keys?
What if the exchange went into liquidation?

bingobars wrote: »

What if I lost my keys?
What if the exchange went into liquidation?

If the exchange looses your holdings and they are deemed unrecoverable, I believe you can make a claim for negligible value as discussed on the previous page: https://www.boards.ie/vbulletin/showpost.php?p=114482022&postcount=54

It is at Revenue's appreciation, but I assume lost keys would be considered to be your problem however, as it is more due to personal negligence (plus it would be hard to prove with certainty that a wallet used to be yours and that you now have no chance of recovering the keys for it anymore).

ordinaryfella wrote: »

Was hoping somebody might be able to shed some light on my situation. Got into crypto in late 2017 - early 2018 and made a bit of money initially, but of course hodl'd and my gains got wiped out. Mostly holding **** coins at this stage. When things started going down massively I kinda just wrote off the whole thing as an expensive lesson and forgot about it. Was pretty angry at myself for being so stupid tbh. Probably put in about 3.5k and it's worth maybe 500 now.

Anyway, fast forward to now and it's looking like I'll make about a 10k capital gains tax profit on some stock. I never declared any of crypto gains/losses and I'm wondering if I can write these off now? I saw penalties for non declaring were mentioned earlier in the thread and I'm wondering how large these will be too? Any advice would be very appreciated.

Just to clarify: have the cryptocurrencies for which you want to record a loss been sold already, or they are still in your possession and you are planning to dispose of them to generate the loss and offset it against you other capital gains?

And also, is you concern to get a penalty for not having declared your losses earlier?

ordinaryfella wrote: »

You are correct on both accounts. They are still in my possession, but I'm thinking of selling now to record the loss to offset the capital gains. Yes, I am concerned about the penalties and how high these would be.

With the caveat that I’m not a tax advisor ans this is just my opinion, I really don’t think you have any issue here.

Since you haven’t sold those assets, you haven’t realised any loss yet, so unless I am mistaken you aren’t behind with declaring anything or at risk of any penalty.

So basically you could sell them now, and on your CGT return for this year you just declare the loss on the crypto and then gain on the shares (you will not be late to declare anything as both the shares and crypto will have been disposed of this year). And Revenue should calculate your CGT due as: gains on your shares minus losses on your crypto minus 1270 (1270 euros is your yearly personal CGT exemption).

Hmm, but from the trade of btc to eth and then buying gnt with eth I believe there should be cgt on each of these transactions. If these happened in 2018 how would I calculate the penalties? I will get an accountant but just want to have a ball park for what I'm looking at here. Thanks for the replies!

Cheers Bob, so let's map out the following:

Sep 2017 bought two eth at 350.

Jan 2018 Traded one eth for gnt. Price of gnt put vlaue of one eth at 500 (+150)

Feb 2018 Traded one eth for gnt. Price of gnt put vlaue of one eth at 600 (+250)

Oct 2020 Sell all my gnt for 200 (200 - 1100) so I have -900

I owe cgt for 2018 if I exceeded the tax free threshold, but I could sell everything this year to make a loss to write off against my cgt.

Hmm, trying to figure out if a made more than 1270 via my trades back in 2018 should be fun...

Ah sorry, meant CGT gains this year. I made more trades than the examples but I'd be surprised if they were above 1,270 in profit, perhaps a very small amount. The hodl killed me tbh. This has really helped my understanding, thanks folks.

Bob24 wrote: »

Yeah assuming the gains you made in 2018 are below 1270 euros, you don't have any pending liability or risk of being fined based one what you said.

As Peregrinus said, in 2018 the CGT you would have owed is for the disposal of your two ETH (400 euros in total). Since this is below the yearly allowance of 1270 you don't owe Revenue anything for that year, so not risk of fine/penalty.

Now in in 2020 you have a loss of 900 euros for the disposal of your GNT. This can be offset against any gains you made on something else.

Does anyone know how Revenue distinguishes between trader and joe soap who makes some trades?
My return shows ~400 trades yet these can be maybe 30 trades broken up (eg sell at market value, so the price fluctuates, meaning more than one trade made)

Does the revenue have a limit on amount of trades before i pay the 20/40% instead of cgt?

No, there's no set number of trades that tips you into being a trader, or not being a trader. It's a judgment that has to take into account a number of factors - size of trades, frequency of trades, number of trades, degree of system and method involved, amount of time you devote to the activity, etc, etc.

If you're giving about 30 instructions per year, that's less than one a week. Unless you're trading pretty large amounts each time, or consistently spending a good amount of time researching the markets and choosing the timing and volume of your trades, I wouildn't think you are likely to be viewed as carrying on a trade.

In general the revenue default to treating activities like this as investment, not trade. Nine times out of ten when there's a row about this its because the taxpayer claims to be carrying on a trade (because he has made losses, and he wants to set them off against the income from his day job) and the Revenue insisting that, no, his activity does not amount to a trade. It's comparatively unusual for the fight to be the other way around.

Bob24 wrote: »

Agree with the above, and I would add that whether or not the taxpayer has a full time job and is a PAYE worker might play a role as well (if someone is paying taxes on a full time job to Revenue which has nothing to do with trading, it seems hard to argue that their main activity is to be a professional trader).

Well, yes, but, on a nitpick, the question is not whether your main activity is as a professional trader; it's just whether you're carrying on a trade. You can certainly carry on a trade part-time, and derive only the smaller part of your income from it. I recall a case of a man who had a five-days-a-week paid job, but also kept a small antique shop which only traded on Saturdays and bank holidays, and largely catered to tourists/visitors. The shop barely covered its own expenses but it was a trade.

Can someone generally point me in the direction of where I can understand the whole cashing out/paying 33% capital gains taxmore easily?

I have been trading alt coins since 2016 on 5 different exchanges.. with 2 different bank accounts.. with many gains/losses in between. I have not kept track one bit..and have sold BTC for one coin, then to another coin and so on.. then back into BTC hundreds of times. 1000s of different transactions.. is filing the revenue form as simple as attaching an export of these trade sheets?

Are Revenue actually looking for the full profit/loss on each trade.... If so that'll be an enjoyable task.

Isn't the point of crypto that it's difficult to trace? Couldn't you just continue trading without declaring any of it and say it was all lost? Revenue arent going to be bothered going back and tracking all your shltcoins unless you're Al Capone or something. I'd nearly pay them whatever fee to calculate that for me past a certain point.

I'm not currently trading, for the record. Made €7k on just Litecoin in 2018 and declared it to revenue when I cashed out.

Recorded by whoever undertook the transaction.

The initial transaction usually being bank to crypto dealer, after this money is out of the banking system, it's a lot more difficult for revenue to ascertain what has happened it.

ie €2,000 purchase of cryptocurrency
exchange cc1 profit for cc2&3
losses made, balancing any profit

You're hardly expected to declare every single crypto transaction you do to Revenue? I don't send them my bank statements to them every year, why should they be briefed on this, especially if they're not likely to make any money off pursuing it?

There are full-on state surveillance levels of involvement being suggested by posters here.

Heh, I'd better tell that to all the lads who are dealing drugs on the dark web.

SpacialNeeds wrote: »

Recorded by whoever undertook the transaction.

The initial transaction usually being bank to crypto dealer, after this money is out of the banking system, it's a lot more difficult for revenue to ascertain what has happened it.

ie €2,000 purchase of cryptocurrency
exchange cc1 profit for cc2&3
losses made, balancing any profit

You're hardly expected to declare every single crypto transaction you do to Revenue? I don't send them my bank statements to them every year, why should they be briefed on this, especially if they're not likely to make any money off pursuing it?

There are full-on state surveillance levels of involvement being suggested by posters here.

You are engaged in a taxable activity. Its your responsibility to ensure you are compliant as it's a self assessed system. You file your CGT return each year but don't attach your workings showing every transaction unless requested. If you are requested during an intervention and you can't back up your figures, that's when you'll have possibly significant issues.