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

09-01-2018 3:38pm

Dades wrote: »

That's been the disconnect on this thread, alright (I probably haven't helped...)

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.

Is it form 12 or a CG1 Return? As I see both being mentioned.

ZeroThreat · 09-01-2018 3:39pm

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.

'you people'?

you sound like a complete self-righteous knobhead, a socialist pinko (profit is evil) Joe Higgins type standing over his keyboard trembling with rage pointing your accusing finger at the screen in his faux outrage at the evil capitalists

In all your anger you obviously couldn't see I posted the above in a tongue and cheek manner, from the p.o.v. of the few 'libertarian' types on this thread who didn't want to pay any tax and were yapping on about moving abroad to cash in their vast (alleged) fortunes.

The vast majority on this thread weren't arguing against the 33% CGT rate, merely debating or questioning the manner in which it is calculated.

Think about it, some short statement on cyrptocurrency by ex-minister Noonan, a man who has probably never even used internet banking in his life is supposed to be sufficient to cover an area which has exploded in very recent times. (I guess at least he had a bank account unlike previous finance ministers)

I doubt he had the vaguest idea of what bitcoins even were.

The best thing the finance department can do now is appoint a few specialists in the revenue who actually can review the current rules as they pertain to cryptos and update the information on their website. If it was as clear as 'you people' (trembling finger pointing hand at screen) make out it is, I doubt there'd be as many posts on this thread right now.

GreeBo · 09-01-2018 3:40pm

jobless wrote: »

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 arises

It arises no matter what you do.

EUR to BTC/LTC/ETH
then
BTC/LTC/ETH to your ALT

What if the value of your BTC/LTC/ETH rose by 200% between you buying it and buying your ALT?

Unless you are buying in EUR you are disposing an assert and hence CGT is liable.

GreeBo · 09-01-2018 3:41pm

ZeroThreat wrote: »

'you people'?

No
he clearly said
"you, people"

completely different.

GreeBo · 09-01-2018 3:43pm

ZeroThreat wrote: »

The best thing the finance department can do now is appoint a few specialists in the revenue who actually can review the current rules as they pertain to cryptos and update the information on their website. If it was as clear as 'you people' (trembling finger pointing hand at screen) make out it is, I doubt there'd be as many posts on this thread right now.

Update them to say what exactly?
"Yep, its the same as it always was"

The posts on this thread are mainly people trying to figure out a way of avoiding tax. Calculation isnt the issue, its declaring at all tbh.

Peregrinus · 09-01-2018 3:44pm

jobless wrote: »

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 arises

Well, if you have the cash, could you buy some Crypto C and then immediately use it to buy the Crypto B?

If Crypto B can only be bought with Crypto A then, yes, if you are deterrmined to invest in Crypto A the only way you can do that is by disposing of some Crypto A, which will crystallise a gain (or a loss, of course, if the price has fallen). That's unfortunate, and it might affect your decision to invest in Crypto B in the first place. But it's not really the tax system penalising you; if there's a "penalty", it's a product of the bizarre restriction attached to investing in Crypto B.

jobless · 09-01-2018 3:49pm

GreeBo wrote: »

It arises no matter what you do.

EUR to BTC/LTC/ETH
then
BTC/LTC/ETH to your ALT

What if the value of your BTC/LTC/ETH rose by 200% between you buying it and buying your ALT?

Unless you are buying in EUR you are disposing an assert and hence CGT is liable.

whats ifs arent the argument here

my point is exactly that you cant buy these alts with EUR.... at least not yet...
so in this instance its not like shares.... I can buy most types of shares with cash...

ZeroThreat · 09-01-2018 3:50pm

GreeBo wrote: »

Update them to say what exactly?
"Yep, its the same as it always was"

The posts on this thread are mainly people trying to figure out a way of avoiding tax. Calculation isnt the issue, its declaring at all tbh.

I don't agree, before x-mas there were more of the 'taxation is theft' types on here tbh, seems to be more questions lately from people with a lot of trades and swaps and how to track them, or FIFO/LIFO etc.

Maybe you're just assuming the worst of people here? (as officialdom in this country tends to do)

I have no problem paying a third of my gains at the end of the day. (obviously I wish we were still with the pre-crash 20% rate but that can't be helped)

Peregrinus · 09-01-2018 3:51pm

There are lots of securities that you can only buy with, e.g, USD, because they are quoted on a US exchange. I don't see how this is any different.

jobless · 09-01-2018 3:51pm

Peregrinus wrote: »

Well, if you have the cash, could you buy some Crypto C and then immediately use it to buy the Crypto B?

If Crypto B can only be bought with Crypto A then, yes, if you are deterrmined to invest in Crypto A the only way you can do that is by disposing of some Crypto A, which will crystallise a gain (or a loss, of course, if the price has fallen). That's unfortunate, and it might affect your decision to invest in Crypto B in the first place. But it's not really the tax system penalising you; if there's a "penalty", it's a product of the bizarre restriction attached to investing in Crypto B.

the bizarre restriction is unfortunately the way things work in crypto world until it matures...... thats why we need proper rules for the space from Revenue

GreeBo · 09-01-2018 3:52pm

jobless wrote: »

my point is exactly that you cant buy these alts with EUR.... at least not yet...
so in this instance its not like shares.... I can buy most types of shares with cash...

But what exactly has that got to do with revenue?

How do you suggest they distinguish between you buying and disposing of BTC purely to buy ALT1 versus you buying BTC, hodling to make a profit and then using that profit to buy ALT1?

There is no difference other than in your head I'm afraid!

Some exchanges only trade via BTC, some trade via BTC, ETH & LTC, are you suggesting that revenue.ie treats people differently based on what exchange they purchased their coins on?

jobless · 09-01-2018 3:56pm

GreeBo wrote: »

But what exactly has that got to do with revenue?

How do you suggest they distinguish between you buying and disposing of BTC purely to buy ALT1 versus you buying BTC, hodling to make a profit and then using that profit to buy ALT1?

There is no difference other than in your head I'm afraid!

Some exchanges only trade via BTC, some trade via BTC, ETH & LTC, are you suggesting that revenue.ie treats people differently based on what exchange they purchased their coins on?

if i have a transaction for 100 btc one day before to buy 10000k alt the next surely they would have the cop on to know thats what i intended

anyway its all guess work until there are proper rules given

GreeBo · 09-01-2018 4:07pm

jobless wrote: »

if i have a transaction for 100 btc one day before to buy 10000k alt the next surely they would have the cop on to know thats what i intended

How do you figure they would know?
If the price of your ALT rose or dropped by 200% within those 24 hours would you do the same thing? Should they think the same thing? Should they penalise you for hanging onto the BTC in the event the ALT market crashed before you could invest?

All the subjectivity is exactly why the process is not subjective.

What if you could only buy any crypto coins via EUR.
Anytime you wanted to buy a coin you had to dispose of another coin into EUR, would you be ok paying it then?
If so, why? EUR is just another currency.

jobless wrote: »

anyway its all guess work until there are proper rules given

There are proper rules given, you just dont like them!

jobless · 09-01-2018 4:21pm

GreeBo wrote: »

How do you figure they would know?
If the price of your ALT rose or dropped by 200% within those 24 hours would you do the same thing? Should they think the same thing? Should they penalise you for hanging onto the BTC in the event the ALT market crashed before you could invest?

All the subjectivity is where the process is not subjective.

What if you could only buy any crypto coins via EUR.
Anytime you wanted to buy a coin you had to dispose of another coin into EUR, would you be ok paying it then?
If so, why? EUR is just another currency.

There are proper rules given, you just dont like them!

So your are telling me there is progress since this? ....
the word 'likely' isnt really hard and fast

"Originally Posted by Minister Noonan 2014
Crypto-currencies, such as Bitcoin, are not legal tender in the Euro area. E-commerce, including the use of virtual currencies, presents a challenge to tax administrations throughout the world. The Revenue Commissioners and tax administrations in other countries are actively monitoring developments. From the information provided, it is not clear how Bitcoin would be treated for CGT purposes.

However, it is likely that gains accruing from speculation on Bitcoin would be liable for CGT in the normal way."

GreeBo · 09-01-2018 4:27pm

jobless wrote: »

So your are telling me there is progress since this? ....
the word 'likely' isnt really hard and fast

"Originally Posted by Minister Noonan 2014
Crypto-currencies, such as Bitcoin, are not legal tender in the Euro area. E-commerce, including the use of virtual currencies, presents a challenge to tax administrations throughout the world. The Revenue Commissioners and tax administrations in other countries are actively monitoring developments. From the information provided, it is not clear how Bitcoin would be treated for CGT purposes.

However, it is likely that gains accruing from speculation on Bitcoin would be liable for CGT in the normal way."

Let me rephrase your question.
Have you seen anything that would lead you to believe that gains for Bitcoin would *not* be liable in the normal way?

sublime1 · 09-01-2018 4:31pm

GreeBo wrote: »

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.

I suggest that if you're tired of repeating that you consider abstaining from the discussion, because although I realise that you are trying to be helpful, repeating yourself is only shedding more heat rather than light on the subject.

You seem to inhabit a black-and-white world, where we are faced with 2 stark choices:

Either, treat crypto exactly the same in every way as fiat currencies (even though that is impossible due to things I already mentioned such as mining, forks, gift coins, ICOs, but you've conveniently ignored those)... OR
"Good news, its all free, no tax to pay, hurray!"

Can you, even for a second, recognise that there may be shades of grey here, and that crypto is actually something new and different from fiat currencies, and that maybe new rules are needed, and that maybe a case could be made to the Revenue Commissioners for a new model of taxation for these complex financial instruments?
If you can't, I suggest that you close your browser, because with all the goodwill in the world, you're really not helping.

GreeBo · 09-01-2018 4:36pm

sublime1 wrote: »

I suggest that if you're tired of repeating that you consider abstaining from the discussion, because although I realise that you are trying to be helpful, repeating yourself is only shedding more heat rather than light on the subject.

You seem to inhabit a black-and-white world, where we are faced with 2 stark choices:
Either, treat crypto exactly the same in every way as fiat currencies (even though that is impossible due to things I already mentioned such as mining, forks, gift coins, ICOs, but you've conveniently ignored those)... OR

"Good news, its all free, no tax to pay, hurray!"

Can you, even for a second, recognise that there may be shades of grey here, and that crypto is actually something new and different from fiat currencies, and that maybe new rules are needed, and that maybe a case could be made to the Revenue Commissioners for a new model of taxation for these complex financial instruments?
If you can't, I suggest that you close your browser, because with all the goodwill in the world, you're really not helping.

Why would you not treat all of those things as "gifts" for tax purposes?

The have a value when they are given to you, if you dispose of them for more than that initial value you made a gain, otherwise you made a loss?
How would you suggest they are treated? Have you spoken to an accountant and if so, have they suggested contrary advice?

I still havent heard an argument that says why a new model would be needed when its covered under the existing model?

By all means try to get a more favourable model agreed by revenue, but until then your CGT obligation is just that, your obligation.

A new(er) comment on the issue.
http://www.thejournal.ie/readme/cryptocurrencies-lack-of-regulation-means-investors-can-make-a-lot-of-money-fast-3470179-Jul2017/

jimmycrackcorm · 09-01-2018 4:40pm

What devices a crypto as something that is a taxable asset for disposable tax gains?

If a new crypto pops up tomorrow and you exchange, say btc, for it. How is the brain or loss determined on that?

GreeBo · 09-01-2018 4:42pm

jimmycrackcorm wrote: »

What devices a crypto as something that is a taxable asset for disposable tax gains?

If a new crypto pops up tomorrow and you exchange, say btc, for it. How is the brain or loss determined on that?

You decide as you are assessing yourself.

When you sell/exchange/gift the BTC you are either realising a gain or a loss based on the difference between the initial and current value.

09-01-2018 5:43pm

I have a lot of writing and recording to do

Whatever about certain specifics which remain vague to crypto profits and tax, there is some information coming through in this useful thread which is factual: As someone who is self-employed/declaring, we the individual are fully responsible for the recording and reporting of our activities to Revenue.

As a self-employed worker, I've known this for years. However, as someone new to cryptos and trading, and who started quite bullish, I didn't know the extent to which that recording was necessary.

Simply, I assumed without much research that I could just pay the CGT on what I cash-out on, and that's it. However, I really don't think it will be that simple of a process. Certainly not in the case of an audit.

Hey Mr Revenue, John Lambo here.

I put €1000 into cryptocurrency at the start of the year. By the end of the year that €1000 was worth €4000 to me through various trades. I cashed out that €3,000 profit. Deducting the €1270 annual CGT allowance from that, here is a cheque for 33% of €1730.

You're welcome, bye now.

Yeah, maybe that will suffice for the short-term, but not if John Lambo gets audited anytime in the next decade or so.

Thankfully, in a court of law, the accused is assumed innocent until proven guilty. If Revenue come looking for you though, it is more a case of the opposite: Guilty until proven innocent.

Sure, you can point to the fact that you reported to Revenue each year with your overall profit. However, they can easily decide in an audit that this is not good enough, and require you to provide the finer details of your trading. "Ah sure there's loads of them, I don't know where to start looking for all my trade history over the last year, it would take me ages" would unfortunately not be a sufficient excuse.

So, with all that in mind and having just realised its importance after reading through this thread, I scrolled through my trade history on Binance.

*Gulp*

I'm barely on Planet Cryptos 4 weeks, but jeez. I traded like an absolute dickhead in those first 7-10 days. Granted, a few weeks later I'm not Obi Wan Cryptobi yet, but I was absolutely clueless and a pure bull in those earlier days. Thankfully I'm reading this thread before I do another 150+ trades which will require retro-documenting.

Copying all of my trades from Binance into a more readable history won't be too much of a problem, it'll just take some time. However, the thoughts of having to find the dollar value specific to that moment in time of each trade, it's near enough to bring on a mild panic attack here.

TL:DR - Record your trades. Be it by typing them into a notepad document, or penning them by ink and quill on aged parchment under the pale moonlight. Whatever your method of 'writing' in this day and age, record your trades. If Revenue have you by the balls, you have to go into extreme detail of why they should let go. Better be safe now, than sorry and inundated with work later.

Great thread, keep it rolling.

Matt Simis · 09-01-2018 5:49pm

Whats the actual penalty for not doing your CGT correctly (which I would want Revenue to make a clear statement on, not us picking random articles in papers)? Obviously the 33% tax is a given if this is what they decide.. but a fine too? How much?

GreeBo · 09-01-2018 6:03pm

Matt Simis wrote: »

Whats the actual penalty for not doing your CGT correctly (which I would want Revenue to make a clear statement on, not us picking random articles in papers)? Obviously the 33% tax is a given if this is what they decide.. but a fine too? How much?

revenue.ie clearly covers CGT liabilties.

Revenue fines are *very* hefty, you could easily be looking at 100% or more of the tax due in fines.

machiavellianme · 09-01-2018 6:08pm

GreeBo wrote: »

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.

What if you bought BTC #1 on Mt Gox and it's now safely in your paper wallet and bought the new BTC on Gdax to transfer to bittrex and convert to NEO.

GreeBo · 09-01-2018 6:27pm

machiavellianme wrote: »

What if you bought BTC #1 on Mt Gox and it's now safely in your paper wallet and bought the new BTC on Gdax to transfer to bittrex and convert to NEO.

No difference from revenues point of view, gain is based on whatever percentage of the MtGox BTC you disposed of to purchase the NEO.

sublime1 · 09-01-2018 8:02pm

(This is a reply to Greebo;105783938 - I can't seem to get the quoting to work correctly - apologies)

How do you even know that Revenue will consider CGT as the appropriate type of taxation for crypto? If you recall my initial post at the start of this thread, I mentioned that I have spoken to an accountant, and that it was he who suggested that gains from crypto trading may even be considered as income tax. Which is obviously even more onerous for many people than CGT. You sound very authoritative and confident in your replies to everyone here, but do you know any more than my accountant? He at least admits that he doesn't actually know, and he's still looking into it. Unfortunately there's a lot to learn and it's easy to make a rushed judgement ("oh, it's just another type of currency", or "oh, it's trading so you have to pay income tax").

One of the reasons I'm reluctant to go along with the "crypto should be taxed the same as regular currency or stocks" is the examples from other countries. We've already heard from our friends in Germany, Austria and Panama in this very thread. Ireland is so-called high-tech flyer, so wouldn't we expect some more enlightened thinking from our pro-business minister? Indeed, I did see an article quoting one of the Irish blockchain tech companies asking for favourable taxation for bitcoiners, so who knows what may come of that. The point again (and I repeat myself) is that we don't know.
It's very clear to me that the vast majority of people believe (as I did) that only selling for fiat is a taxable event. As everyone knows, crypto traders are not a particularly sophisticated bunch, so Revenue's silence is most unhelpful.
For example, the vast majority of debate is obviously from the US. While you can say it's not relevant to Irish tax payers, the fact that, at one stage in the US, crypto to crypto trades were considered "like-kind exchanges" and therefore not taxable, has lead to an lot of confusion for people. I believe that that is now a minority opinion in the US, but it's still an opinion and not a hard fact.
Regarding some of the issues I listed (mining, forks, ICOs etc) I have seen arguments for and against different approaches for all of them. Most people would consider a fork to be a gift (i.e. with a zero cost basis), but I've seen the argument made (by a CPA nonetheless) that the fork coin should have a basis cost equal to its initial sale price on exchanges. So again, it's not clear and these things need to be hashed out.

Regarding the hazards of trying to tax serious trading, this comment on Reddit does it better than I can. Again you'll notice the lack of sophistication in the replies to the first post. Most people are willing to pay their taxation dues, but Revenue and the tax authorities in other countries should really have stepped and clarified the issues by now. For unsophisticated traders and hodlers, given the ease of which trades can be made, and give the frantic bubble we have been in, with easy money to be made (supposedly), a sort of guiding hand from the powers that would have been very welcome.

One thing I would like to see is sort of comment from the more visible national blockchain presences e.g. https://twitter.com/irl_blockchain https://twitter.com/ReubenGodfrey or https://twitter.com/BTCBehaviour
I don't personally use Twitter - could somebody here reach out to these guys for a comment?

sublime1 · 09-01-2018 8:05pm

Sorry everyone for the repetition in my last comment - the forum software is mangling my replies when I try to quote someone.

Fakent.ie · 09-01-2018 8:17pm

sublime1 wrote: »

(This is a reply to Greebo;105783938 - I can't seem to get the quoting to work correctly - apologies)

How do you even know that Revenue will consider CGT as the appropriate type of taxation for crypto? If you recall my initial post at the start of this thread, I mentioned that I have spoken to an accountant, and that it was he who suggested that gains from crypto trading may even be considered as income tax. Which is obviously even more onerous for many people than CGT. You sound very authoritative and confident in your replies to everyone here, but do you know any more than my accountant? He at least admits that he doesn't actually know, and he's still looking into it. Unfortunately there's a lot to learn and it's easy to make a rushed judgement ("oh, it's just another type of currency", or "oh, it's trading so you have to pay income tax").

One of the reasons I'm reluctant to go along with the "crypto should be taxed the same as regular currency or stocks" is the examples from other countries. We've already heard from our friends in Germany, Austria and Panama in this very thread. Ireland is so-called high-tech flyer, so wouldn't we expect some more enlightened thinking from our pro-business minister? Indeed, I did see an article quoting one of the Irish blockchain tech companies asking for favourable taxation for bitcoiners, so who knows what may come of that. The point again (and I repeat myself) is that we don't know.
It's very clear to me that the vast majority of people believe (as I did) that only selling for fiat is a taxable event. As everyone knows, crypto traders are not a particularly sophisticated bunch, so Revenue's silence is most unhelpful.
For example, the vast majority of debate is obviously from the US. While you can say it's not relevant to Irish tax payers, the fact that, at one stage in the US, crypto to crypto trades were considered "like-kind exchanges" and therefore not taxable, has lead to an lot of confusion for people. I believe that that is now a minority opinion in the US, but it's still an opinion and not a hard fact.
Regarding some of the issues I listed (mining, forks, ICOs etc) I have seen arguments for and against different approaches for all of them. Most people would consider a fork to be a gift (i.e. with a zero cost basis), but I've seen the argument made (by a CPA nonetheless) that the fork coin should have a basis cost equal to its initial sale price on exchanges. So again, it's not clear and these things need to be hashed out.

Regarding the hazards of trying to tax serious trading, this comment on Reddit does it better than I can. Again you'll notice the lack of sophistication in the replies to the first post. Most people are willing to pay their taxation dues, but Revenue and the tax authorities in other countries should really have stepped and clarified the issues by now. For unsophisticated traders and hodlers, given the ease of which trades can be made, and give the frantic bubble we have been in, with easy money to be made (supposedly), a sort of guiding hand from the powers that would have been very welcome.

One thing I would like to see is sort of comment from the more visible national blockchain presences e.g. https://twitter.com/irl_blockchain https://twitter.com/ReubenGodfrey or https://twitter.com/BTCBehaviour
I don't personally use Twitter - could somebody here reach out to these guys for a comment?

literally only comment on this entire thread that makes sense, good job mate

NewApproach · 09-01-2018 9:57pm

sublime1 wrote: »

This is exactly the low-effort kind of contribution I was trying to avoid in this discussion.

Another suggestion that someone pointed out to me is the idea of doing trades through a company structure. Seeing the low rates of corporate tax, this could be worth looking into. Has anyone any thoughts?

Bananas idea

NewApproach · 09-01-2018 10:03pm

jobless wrote: »

if i have a transaction for 100 btc one day before to buy 10000k alt the next surely they would have the cop on to know thats what i intended

anyway its all guess work until there are proper rules given

The rules are quite clear.

Dades · 09-01-2018 10:21pm

sublime1 wrote: »

Another suggestion that someone pointed out to me is the idea of doing trades through a company structure. Seeing the low rates of corporate tax, this could be worth looking into. Has anyone any thoughts?

As well as CT, you'd have to pay income tax on any profits taken from the company. Not to mention the added pain in the hoop of annual returns, filings etc.

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

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