CoinTracker | Calculate Crypto Tax with 100% Accuracy
As a Canadian cryptocurrency investor, do you know how you should be reporting your crypto tax obligations? The chances are that if you are a retail cryptocurrency investor, you don’t. However, ignorance is no excuse for crypto tax avoidance and definitely not in the eyes of the Canada Revenue Agency.
How to Use CoinTracker to Track Crypto Tax Liabilities
CoinTracker is an easy to use tool cryptocurrency traders and investors can take advantage of to calculate crypto tax obligations with pinpoint accuracy. However, to understand how CoinTracker works, it is necessary to understand how cryptocurrency taxes work.
When do Canadians Need to Pay Tax on Cryptocurrency?
The Canada Revenue Agency applies the same tax rules to cryptocurrency as it does property and equity investments. This means that traders and investors need to record capital gains tax liabilities whenever they dispose of digital assets.
Capital Gains and Crypto Tax Explained
In Canada, Canadians are required to pay tax on 50% of the capital gains of any equity investment when that investment is liquidated. In simple terms, this means that Canadians need to pay capital gains tax on 50% of any cryptocurrency investment profits.
If you bought Bitcoin at $1 in 2009 and sold at $20,000 in 2017, you would need to pay capital gains tax on 50% of $19,999.
Where Crypto Tax Confusion Sets In
Paying capital gains tax on cryptocurrency sounds simple. However, in practice, things can quickly get a lot more complicated. The Canada Revenue Agency advises that capital gains tax applies whenever digital assets are liquidated.
Because even buying a coffee with Bitcoin is considered a taxable event, calculating cryptocurrency taxes can be inordinately difficult. Cryptocurrency traders, for example, may well liquidate cryptocurrency tens, if not hundreds of times a year. Thankfully, CoinTracker can help Canadians stay abreast of tax obligations.
How CoinTracker Works
How CoinTracker works is simple. After creating an account, users link CoinTracker to each of the exchanges they use to trade cryptocurrency or use their import tool to upload your .csv file. Users can also link CoinTracker directly to the public address details of over 2,000+ digital asset wallets.
As soon as CoinTracker is paired with wallets and exchanges, the platform records every transaction where liquidating cryptocurrency results in a taxable event. Canadians can, therefore, report and calculate their capital gains tax liabilities with relative ease.
Crypto Tax Compliance is Not Optional
There is a strong argument to be made that all Canadian cryptocurrency users should be using a platform like CoinTracker.
The move hasn’t received much mainstream attention. However, Canada, the UK, and the United States have all committed to auditing public blockchains to identify cases of crypto tax avoidance. This being the case, it is definitely better to get crypto tax compliant sooner rather than later.
Disclaimer: Article was written/authored by an outsourced freelancer and should not be taken as legal or accounting advice. Please consult your accountant for your personal tax matters.
Posted by: Duane Seamans, MyBTC.ca CEO