![]() ![]() The income/capital distinction also comes with important tax implications. Likewise, if the account closure results in a crypto-for-crypto exchange (e.g., upon closing the account, you trade the cryptocurrency held within that account to acquire another type of cryptocurrency), the resulting profit will be taxed as a capital gain or as business income. For example, if the account closure results in the liquidation of any tokens or coins within the account, the cryptocurrency-for-fiat exchange constitutes a disposition, and any resulting profit is taxed, either as a capital gain or as business income. Hence, when forced to close a cryptocurrency-exchange account or switch an account from one exchange to another, a Canadian taxpayer might incur Canadian income-tax liability-depending on what happens to the cryptocurrency within the exchange account upon its closure. By implication, each intermediate crypto trade-e.g., purchasing Bitcoin for the sole purpose of acquiring a trading pair-includes a disposition and will thereby trigger a taxable transaction. It also includes a trade of tokens or coins in one type of cryptocurrency for tokens or coins in another cryptocurrency. In the context of transactions involving cryptocurrency, a “disposition” includes a sale of cryptocurrency for fiat currency. ![]()
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