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

GreeBo · 09-01-2018 12:20am

lifeandtimes wrote: »

True but a lot of new people will be ignorant to this and the tax man does come calling they won't have any evidence to back up trades as they disappear after 3 months usually

But ignorance isn't a valid excuse for anything.

It Is your obligation to prove your situation, not theirs. In this case you are guilty until you prove innocence.

GreeBo · 09-01-2018 12:21am

Angel Dead Apartment wrote: »

The bigger question is why is this necessary. Why are revenue not happy with a simple calculation of "amount sold to euro - investment - 1270 = taxable amount". What difference do all them 100 trades some up/some down make when at the end off all that its still going to end up with the same taxable amount as just calculating by subtracting your original investment from your final euro figure.

I guess it's proof of the gain or loss you are filing.

Same as with stocks.

09-01-2018 12:22am

GreeBo wrote: »

But ignorance isn't a valid excuse for anything.

It Is your obligation to prove your situation, not theirs. In this case you are guilty until you prove innocence.

Revenue have not given any guidelines though so what will they point to when saying you didn't do it right?

GreeBo · 09-01-2018 12:23am

Angel Dead Apartment wrote: »

Revenue have not given any guidelines though so what will they point to when saying you didn't do it right?

What guidelines do you think are missing?

09-01-2018 12:28am

GreeBo wrote: »

What guidelines do you think are missing?

They have not defined how crypto currency should be handled, they haven't even actually said it should be taxed. So how for instance is someone supposed to know that they need to keep track of every singe trade for. The obvious and sensible way most people would calculate their tax bill is when they withdraw funds to their bank account then would subtract their investment and the 1270 exemption and pay tax on the balance.

lifeandtimes · 09-01-2018 12:42am

Angel Dead Apartment wrote: »

They have not defined how crypto currency should be handled, they haven't even actually said it should be taxed. So how for instance is someone supposed to know that they need to keep track of every singe trade for. The obvious and sensible way most people would calculate their tax bill is when they withdraw funds to their bank account then would subtract their investment and the 1270 exemption and pay tax on the balance.

Obvious and sensible do not go together when talking about revenue.

They probably want an a to b to c of everything. Not only that people pay fees per transaction so if you put an amount in and them take it out again you are already down.

So by the method you will need how you did all trades, all fees applied to prove what you withdrew was what you made. But what's to stop people leaving crypto on exchanges and then shaving bit by bit off.

It's going to get very messy and we need clear guidelines from revenue but by the sounds of it everyone is too afraid to ask in case it peaks revenues interest in the matter and then they clamp down on everyone.

GreeBo · 09-01-2018 1:03am

Angel Dead Apartment wrote: »

They have not defined how crypto currency should be handled, they haven't even actually said it should be taxed. So how for instance is someone supposed to know that they need to keep track of every singe trade for. The obvious and sensible way most people would calculate their tax bill is when they withdraw funds to their bank account then would subtract their investment and the 1270 exemption and pay tax on the balance.

Minister for finance answered in Dec 2013, crypto speculation should be treated as any other capital gain or loss.

I don't see what the confusion is the.
If you don't understand it yourself, get an accountant as you normally would. There is nothing special about crypto really, I think most are using that idea as an excuse to do nothing tbh.

The gain is made on disposal, nothing to do with withdrawing euro to your bank. Someone invented that idea and now it's persisting, it's still made up though.

The guidelines for any other CGT are clear, purple pay it every year, crypto is no different.

GreeBo · 09-01-2018 1:05am

And you can be sure they are aware of it, it's not like asking them is going to suddenly reveal the reality of crypto to them!

AlmightyCushion · 09-01-2018 1:11am

Angel Dead Apartment wrote: »

They have not defined how crypto currency should be handled, they haven't even actually said it should be taxed. So how for instance is someone supposed to know that they need to keep track of every singe trade for. The obvious and sensible way most people would calculate their tax bill is when they withdraw funds to their bank account then would subtract their investment and the 1270 exemption and pay tax on the balance.

For currency trading and stock trading it's on a per transaction basis. I think it's safe to say that you should do the same with crypto currency. People manage to keep track of every single currency or stock trade they make for tax purposes, it's not any more difficult to do this for crypto currency.

Selik · 09-01-2018 1:17am

As someone who does this with stocks I can tell you it's ALOT more difficult with crypto mainly due to the fact that alot of trades won't have any reference to the USD or EUR cost. Factor in 1000s of trades a year (and even more for previous years for hodl coins) across multiple exchanges and things get trickier (and messier) still.

GreeBo · 09-01-2018 1:25am

Selik wrote: »

As someone who does this with stocks I can tell you it's ALOT more difficult with crypto mainly due to the fact that alot of trades won't have any reference to the USD or EUR cost. Factor in 1000 trades a year (and even more for previous years for hodl coins) across multiple exchanges and things get trickier (and messier) still.

Only if you are trying to do it retrospectively though.

We all know cgt is due, ignoring it until it's difficult to calculate won't really wash with revenue.

AlmightyCushion · 09-01-2018 1:31am

Selik wrote: »

As someone who does this with stocks I can tell you it's ALOT more difficult with crypto mainly due to the fact that alot of trades won't have any reference to the USD or EUR cost. Factor in 1000 trades a year (and even more for previous years for hodl coins) across multiple exchanges and things get trickier (and messier) still.

I get what you're saying and you are right. If I convert $10000 to sterling at 4PM on a Tuesday 4 months ago, I can find out roughly what the exchange rate was at that time for both those currencies. Might not be exact but it'll be close. Whereas if I trade 1 bitcoin for Eth on the same day, I imagine it's difficult for me to find out what the euro value was of those currencies at that time. It's probably easier to do it as you perform the trades though. Regardless, it has to be done.

GreeBo · 09-01-2018 1:47am

AlmightyCushion wrote: »

I get what you're saying and you are right. If I convert $10000 to sterling at 4PM on a Tuesday 4 months ago, I can find out roughly what the exchange rate was at that time for both those currencies. Might not be exact but it'll be close. Whereas if I trade 1 bitcoin for Eth on the same day, I imagine it's difficult for me to find out what the euro value was of those currencies at that time. It's probably easier to do it as you perform the trades though. Regardless, it has to be done.

Not really that much harder tbh, lots of resources for historical data, especially for the larger coins.

But your exchange will/should have all the info too, aiming you weren't tracking yourself.

Even if you just have all the trade info and your overall gain or loss I don't think you'll have any problems with revenue.

Selik · 09-01-2018 2:11am

GreeBo wrote:

Even if you just have all the trade info and your overall gain or loss I don't think you'll have any problems with revenue.

That was my approach for 2017 and will probably be the same again this year.

lifeandtimes · 09-01-2018 8:38am

With the boards community being limited in a sense it might be hard to answer but has anyone here every actually withdrawn large amounts to their bank and then declared to revenue?

If they did well then they could give us a run down of how it went

Fakent.ie · 09-01-2018 8:45am

GreeBo wrote: »

I'm not sure being lazy it's a valid excuse.
Also who is doing over 500 trades per day all year?

loads of people , theirs a lot of people day trading hundreds of trades a day,Just because you don't know anyone doesn't mean its not happening

GreeBo · 09-01-2018 8:56am

Fakent.ie wrote: »

loads of people , theirs a lot of people day trading hundreds of trades a day,Just because you don't know anyone doesn't mean its not happening

But these these same people are also totally ignorant of their tax obligations and aren't keeping detailed records of their transactions?

I'd be pretty sure a day trader had all the details of every trade otherwise how exactly are they day trading?

Wait until the end of the year to see if you are in profit or loss territory!?

GreeBo · 09-01-2018 9:00am

lifeandtimes wrote: »

With the boards community being limited in a sense it might be hard to answer but has anyone here every actually withdrawn large amounts to their bank and then declared to revenue?

If they did well then they could give us a run down of how it went

Revenue will accept it and say thank you, same as any other time you self declare.

Some years later they might audit you, same as any other time.

There is nothing special about crypto guys!

Fakent.ie · 09-01-2018 9:06am

GreeBo wrote: »

But these these same people are also totally ignorant of their tax obligations and aren't keeping detailed records of their transactions?

I'd be pretty sure a day trader had all the details of every trade otherwise how exactly are they day trading?

Wait until the end of the year to see if you are in profit or loss territory!?

Most exchanges have an estimated value $, One look at that and you would know if your gained or lost on your last trade, if it was a quick one,

I don't know anyone that writes all there TX down,

GODBLESS whoever they get to read all of these TX's and prove they add up correctly...

Do you invest yourself?

Most people don't even know your "supposed" to write down every TX its not clearly written out like 90% of us assumed we just had to pay CGT when we went back to Euro

Peregrinus · 09-01-2018 9:19am

If you're not keeping records of your investment transactions, how can you know whether your investing activity is profitable or not, which investments have yielded a good return and which have not, which strategies have worked as intended and which have not, etc, etc?

Tax laws are written on the basis that most taxpayers are at least semi-rational, want to know how they are doing, and so keep, or have access to, records of their trading/investing, and that it's reasonable to expect them to be able to access these for the purposes of complying with their tax reporting and payment obligations.

That's not to say that it's impossible that there might be a number of investors who don't care to know how much they have invested or whether their investments are profitable or not. Those investors are obviously going to be in a sticky position when it comes to tax time. Still, it's unreasonable of them to expect the tax system to be designed to accommodate them. They may not care what return, if any, their investments yield, but they should at least realise that the tax authorities will. "I don't care what return my investments earn" doesn't get you out of your tax obligations any more than "I don't care how much my employer pays me" would.

This isn't rocket science, people. If you're trading cryptocurrencies (or anything else) on an online exchange, the exchange is going to generate and send to you a confirmation of every transaction you make. Just save them all in the same folder and, when tax return time comes, slog through them to complete the information you need to calculate your liability. It's a pain, but there it is.

GreeBo · 09-01-2018 10:11am

Fakent.ie wrote: »

Most exchanges have an estimated value $, One look at that and you would know if your gained or lost on your last trade, if it was a quick one,

I don't know anyone that writes all there TX down,

GODBLESS whoever they get to read all of these TX's and prove they add up correctly...

Do you invest yourself?

Most people don't even know your "supposed" to write down every TX its not clearly written out like 90% of us assumed we just had to pay CGT when we went back to Euro

If you are day trading you are not relying on exchanges to tell you if you are making or losing money!

Those people are called auditors...what exactly do you think their job entails if it's not checking thousand of transactions?

Yes I do.

Sorry but it is clearly written out.
Did you ever look at revenue.ie to see your tax obligation? It's there in black and white, cgt due on disposal of asset.

Elessar · 09-01-2018 10:23am

One thing I'm not entirely sure about is this:

If you say, bought 10k XRP, it gained in value and you sold them for 10k ETH, but decided to keep the ETH for a year, and this also gained so when you go to covert that to Euro its now gained 2x its value as it had when you bought it, what do you pay tax on and how do you declare it?

GreeBo · 09-01-2018 10:37am

Elessar wrote: »

One thing I'm not entirely sure about is this:

If you say, bought 10k XRP, it gained in value and you sold them for 10k ETH, but decided to keep the ETH for a year, and this also gained so when you go to covert that to Euro its now gained 2x its value as it had when you bought it, what do you pay tax on and how do you declare it?

Year one you realized profit on disposal of xrp to eth.
Year two you realized profit on disposal of eth to eur.

ZeroThreat · 09-01-2018 10:49am

Elessar wrote: »

One thing I'm not entirely sure about is this:

If you say, bought 10k XRP, it gained in value and you sold them for 10k ETH, but decided to keep the ETH for a year, and this also gained so when you go to covert that to Euro its now gained 2x its value as it had when you bought it, what do you pay tax on and how do you declare it?

You calculate the gains on disposal of the XRP at the date you convert it to ETH and pay tax on that gain.

Then when you sell the ETH the following year, you again calculate the gain, but in calculating this, the cost will be the value of the 10K XRP at the point you exchanged it for the ETH.

ZeroThreat · 09-01-2018 11:03am

GreeBo wrote: »

Revenue will accept it and say thank you, same as any other time you self declare.

Some years later they might audit you, same as any other time.

There is nothing special about crypto guys!

That's all true enough, but I'd would hazard a guess that when they look at someone's bank records back through all the years, and calculate that the money transferred back from crypto exchanges significantly exceeds that which CGT was paid on - those individuals will be red flagged for an audit.

They'll probably make examples of a few dozen people or so and give them massive fines, confiscation of all assets & a many-year non-suspended jail sentence like the garlic criminal.

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.

09-01-2018 11:11am

Peregrinus wrote: »

If you're not keeping records of your investment transactions, how can you know whether your investing activity is profitable or not, which investments have yielded a good return and which have not, which strategies have worked as intended and which have not, etc, etc?

It's fairly simple, you know how much was invested at the start so simply looking at the value of your current portfolio will tell you how you are doing. This of course might be more difficult if you are constantly investing new money into currencies but I'd wager most people just move in a nice round lump sum at the start and maybe add to it on rare occasions so it's fairly easy to say well I invested 1k overall and now my portfolio is worth 2k so I'm up 1k at this moment.

The question really is why this isn't good enough for declaring also. I can't see what revenue want someone to go through each trade when the tax they get at the end will be the very same as if the person just calculated their tax on their overall profit for example a person invests 3k and after 100 trades they sell everything for 6k. 6k-3k-1270 = taxable profit nice and simple, what do revenue want with all the mess in between when they will still end up with the same taxable profit figure. It's almost like they are being awkward trying to discourage investing.

Also another related question are exchange transaction fees deductible?

GreeBo · 09-01-2018 11:27am

Angel Dead Apartment wrote: »

It's fairly simple, you know how much was invested at the start so simply looking at the value of your current portfolio will tell you how you are doing. This of course might be more difficult if you are constantly investing new money into currencies but I'd wager most people just move in a nice round lump sum at the start and maybe add to it on rare occasions so it's fairly easy to say well I invested 1k overall and now my portfolio is worth 2k so I'm up 1k at this moment.

Thats not day trading, which was what the argument was.

Angel Dead Apartment wrote: »

The question really is why this isn't good enough for declaring also. I can't see what revenue want someone to go through each trade when the tax they get at the end will be the very same as if the person just calculated their tax on their overall profit for example a person invests 3k and after 100 trades they sell everything for 6k. 6k-3k-1270 = taxable profit nice and simple, what do revenue want with all the mess in between when they will still end up with the same taxable profit figure. It's almost like they are being awkward trying to discourage investing.

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.

Angel Dead Apartment wrote: »

Also another related question are exchange transaction fees deductible?

Yes as are mining costs.

Selik · 09-01-2018 11:34am

Angel Dead Apartment wrote: »

It's fairly simple, you know how much was invested at the start so simply looking at the value of your current portfolio will tell you how you are doing. This of course might be more difficult if you are constantly investing new money into currencies but I'd wager most people just move in a nice round lump sum at the start and maybe add to it on rare occasions so it's fairly easy to say well I invested 1k overall and now my portfolio is worth 2k so I'm up 1k at this moment.

The question really is why this isn't good enough for declaring also. I can't see what revenue want someone to go through each trade when the tax they get at the end will be the very same as if the person just calculated their tax on their overall profit for example a person invests 3k and after 100 trades they sell everything for 6k. 6k-3k-1270 = taxable profit nice and simple, what do revenue want with all the mess in between when they will still end up with the same taxable profit figure. It's almost like they are being awkward trying to discourage investing.

They don't necessarily WANT this info - just that they might require it further down the line for an audit is all. As I've stated already I looked at working out details of all my trades for 2017 (dating back to 2013 in some cases) and decided it was not worth the hassle/time etc so I just withdrew EVERYTHING to my bank account, worked out the net profit based on what I had invested and this is my declaration figure for 2017.

I thought I might do something different this year but I'm using even more exchanges now and moving lots of coins around between them so I'll probably just do the exact same again this year. If Revenue want backup they can have it but even then I'd be amazing if they wanted to go through 1000s of lines of CSV files (alot without ANY fiat values) only to arrive at more or less the same figure as I declared. If anything the most 100% accurate figure I could have arrived at was ensured by the method I used.

The only difference I might take in my approach this year (assuming it's a good year!) is instead of withdrawing the funds back to my bank account I will simply sell everything back to USD/EUR on various exchanges, add it all up and take screenshots. The reason for this is the opportunity cost of having all funds out of the market for 10-15 days - it cost me a little in December when the markets were popping.

Again - IF Revenue want backup to the net figure on my declaration I'll always have it and they are welcome to trawl through it at their leisure and no doubt serious expense. I would hate to see the fee my accountant would ask for if I was to hand him all of my trades for 2017 and work out the CGT !

ZeroThreat · 09-01-2018 11:57am

Selik wrote: »

They don't necessarily WANT this info - just that they might require it further down the line for an audit is all. As I've stated already I looked at working out details of all my trades for 2017 (dating back to 2013 in some cases) and decided it was not worth the hassle/time etc so I just withdrew EVERYTHING to my bank account, worked out the net profit based on what I had invested and this is my declaration figure for 2017.

I thought I might do something different this year but I'm using even more exchanges now and moving lots of coins around between them so I'll probably just do the exact same again this year. If Revenue want backup they can have it but even then I'd be amazing if they wanted to go through 1000s of lines of CSV files (alot without ANY fiat values) only to arrive at more or less the same figure as I declared. If anything the most 100% accurate figure I could have arrived at was ensured by the method I used.

The only difference I might take in my approach this year (assuming it's a good year!) is instead of withdrawing the funds back to my bank account I will simply sell everything back to USD/EUR on various exchanges, add it all up and take screenshots. The reason for this is the opportunity cost of having all funds out of the market for 10-15 days - it cost me a little in December when the markets were popping.

Again - IF Revenue want backup to the net figure on my declaration I'll always have it and they are welcome to trawl through it at their leisure and no doubt serious expense. I would hate to see the fee my accountant would ask for if I was to hand him all of my trades for 2017 and work out the CGT !

From what I see on these forums most seem to always refer to 'my accountant'.
Anyone here never dealt with them before (work excluded) in relation to their personal finances?

GreeBo · 09-01-2018 12:20pm

ZeroThreat wrote: »

From what I see on these forums most seem to always refer to 'my accountant'.
Anyone here never dealt with them before (work excluded) in relation to their personal finances?

Yes.

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

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