Icai guidelines on cryptocurrency

icai guidelines on cryptocurrency

The existing regulations require a chartered accountancy firm to furnish Form 18 to the ICAI within one month of the approval of the trade/firm. Related · ICAI working on paper on cryptocurrency assets · ICAI releases Exposure Draft Guidance Note on Audit of Banks · ICAI has issued the. ICAI CA Exams: ​​Register For ICAI CA Exam May — Check All Information Related To Exam Here · ICAI CA July Exams Important Guidelines Regarding The. HOW TO ACCEPT CRYPTOCURRENCY ON YOUR WEBSITE

Check out our end of season subscription discounts with a Moneycontrol pro subscription absolutely free. Use code EOSO Click here for details. By Goodera. Full Bio. Driving employee engagement through a culture of volunteering and giving Shared business values for greater impact : An innovative approach Gender equity is as important as gender equality CSR and sustainable development: Do Indian companies care about the environment?

Email Address. Thank you for your comment, we value your opinion and the time you took to write to us! Prev How to harness social media in an era of constant scrutiny. Nothing in the ad should downplay the risks associated with the category, and the VDA products may not be compared to any other asset class which is regulated. The ASCI has also asked celebrity endorsers to do due diligence about the statements and claims made in the advertisement, so as not to mislead consumers. Advertisers and media owners must also ensure that all earlier advertisements must not appear in the public domain unless they comply with the guidelines, post the 15th of April, it said.

Download Financial Express App for latest business news. Written by PTI. February 23, pm. The guidelines say advertisers will have to carry the disclaimer — "crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions" — in a prominent way. Follow us on facebook twitter instagram telegram. US Stock Market. Commodities Supercycle! Commodity ETFs to add to your portfolio in Coca-Cola, Hershey stocks may benefit as input costs rise; Credit Suisse lists risks for consumer staples.

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It is easy to buy Bitcoin and other coins in Portugal. There are some popular platforms that are operating without any limitations in the country. The following are some platforms that you might want to consider:. There are hundreds of groups and communities across the country that deal in different cryptocurrencies.

The Block : This place, serving also as a coworking space, is a famous blockchain community in Lisbon. Here you can meet fellow crypto traders and enjoy being part of a young community. The Blockchain Center Portugal : Based in Porto, this place aims to bring cryptocurrency enthusiasts together. They empower people to build projects with blockchain technology. Blockchain Portugal : This group is also based in Lisbon and open to anyone who is interested in cryptocurrency technologies.

Portugal offers residency by investment via Portuguese Golden Visa program. Check our Portugal Golden Visa ultimate guide to understand the program deeply. For any questions you might have, please check the FAQs section below. Digital Nomad. Table of Contents. Non-Habitual Residency Program in Portugal Portugal is a star when it comes to tax applications for expats.

Related Article. Frequently Asked Questions. Is bitcoin tax-free in Portugal? Are all coins considered tax-free in Portugal? Do I need to register all assets I bought in my country of origin? Is there a limit on the bitcoin amount to be considered tax-free? Do I have to move to Portugal to benefit from the tax-free policy? Only if you move to Portugal, you can benefit from this policy. How are crypto staking, lending, mining, and farming taxed in Portugal?

Do I owe my country of origin any tax after selling my cryptocurrency as a Portugal tax resident? Will bitcoin always be tax-free in Portugal? Most likely not. But at the moment, bitcoin is tax-free in Portugal. Terms of use Advertiser Disclaimer Privacy Policy.

Get in touch. As well as the above, DeFi has brought many new ways for crypto investors to make money. The CRA is pretty behind the curve when it comes to the tax treatment of crypto in Canada, but we can safely assume that based on their business income guidance, most DeFi transactions would be considered business income as you're conducting transactions for a commercial reason. Examples of DeFi transactions that would be viewed as income and subject to Income Tax include:. There are also many play-to-earn platforms and other similar engage-to-earn platforms that have sprung up in the crypto space in recent years.

The rewards you receive from these could also be considered business income and subject to Income Tax. Examples include:. As we said above, the CRA hasn't released specific guidance on most crypto transactions beyond basic dispositions just yet. However, as their guidance for what is considered business income includes conducting activities for commercial reasons - it is quite likely all DeFi transactions would be considered business income and subject to Income Tax.

Of course, it is advisable to speak to an experienced tax advisor for your investments. Unlike crypto capital gains where only half your profits are subject to Capital Gains Tax, the same isn't true for crypto income.

When it comes to Income Tax, you'll take the fair market value of the crypto in CAD on the day you received it and apply your Federal and Provincial Income Tax rates to the entire amount to calculate how much Income Tax you'll pay. You can find your Federal and Provincial Income Tax rates in the tables above. Let's look at an example. No, but also sometimes yes. It all depends on whether you're buying your crypto with CAD or crypto. This said, even though you don't pay tax, it's still really important you keep good records of your crypto transactions so you can keep a detailed account of your cost basis.

This lets you calculate accurate crypto gains and losses when you later dispose of your crypto. Waiting for the moon? Great news, you'll pay no tax to do so. Even if the value of your crypto increases - you'll pay no tax until you realize that gain by selling, spending, swapping or gifting your crypto.

Buying crypto with another crypto is subject to Capital Gains Tax. The CRA view this as a disposition - you're getting rid of one asset. It doesn't matter that you're using it to buy another - you've still disposed of your asset. You need to calculate whether you have a capital gain or loss from your disposition of BTC.

You do however need to keep track of how much you purchased your ETH for so you know your cost basis if you later sell, trade, spend or gift your ETH. Stablecoins are treated like any other cryptocurrency by the CRA - so if you're using stablecoins to buy other cryptocurrencies, any capital gain you make is subject to Capital Gains Tax. Of course, because stablecoins are often pegged to a fiat currency, the price will remain relatively stable. So you're unlikely to have an actual capital gain or loss from disposing of stablecoins as there will be no difference in value from when you bought the coins to when you disposed of them.

Yes - you'll pay tax whenever you sell Bitcoin or any other crypto in Canada. The amount you pay will vary based on your regular income. Selling crypto for fiat currency like Canadian Dollars is a disposition of an asset from a tax perspective. This makes it subject to Capital Gains Tax.

You'll only pay tax on half your capital gain or profit. The tax rate you'll pay depends on your regular income. Devin buys 1 ETH in June He needs to figure out his capital gain by subtracting his cost basis from his sale price. This is his capital gain, he needs to pay Capital Gains Tax on this amount.

This puts him in the He lives in Ontario and his earnings put him in the 9. It doesn't matter what you're selling your crypto for - either way the CRA view it as a disposition from a tax perspective. You're still getting rid of one asset, even if you're replacing it with another.

So selling crypto for crypto is subject to Capital Gains Tax. To calculate your capital gain or loss, subtract the cost basis of the asset you disposed of from the fair market value of the asset on the day you traded it in CAD. No, you won't pay tax on your crypto when you're transferring it between your own wallets or exchanges you use. However, transfer fees and transferring crypto in and out of liquidity pools is a little more confusing from a tax perspective.

Transferring your crypto from one wallet to another isn't seen as a disposition by the CRA. You still own the asset - so it's tax free. You still need to keep records of these transactions in case the CRA ever wishes to audit your crypto assets. Most exchanges will charge you a transfer fee to move your crypto.

If you pay this transfer fee in CAD or another fiat currency - this is tax free. But most of the time, you'll pay these transfer fees in crypto. Spending crypto is a disposition, so it's a taxable event and subject to Capital Gains Tax. This means if the price of your asset has increased since you bought it, when you then spend crypto to transfer it - you'll have a capital gain.

The CRA doesn't have guidance on whether transfer fees are an allowable cost - so we don't know if you can add them to your cost basis under the adjusted cost basis rules. But it's unlikely that they transfer fees are tax deductible. You're charged a flat fee of 0. You're paying in ETH - so you're disposing of your cryptocurrency. So you need to calculate your cost basis and the fair market value of your crypto at the point of disposition.

To keep it simple, let's say the price of ETH hasn't changed since you bought it. This is your disposition - you need to report this to the CRA as a disposition, regardless of the fact you have no capital gain or loss. Of course, doing this for every transaction can be time-consuming, but Koinly can help you do this with our "treat transfer fees as disposals" setting. If you're investing in DeFi protocols - the vast majority of these protocols use liquidity pools.

On the surface, we can liken this to transferring your asset to another wallet or exchange. You're not disposing of the asset and you can take the original asset back at any point. In some instances, this will be true. But many DeFi protocols now give investors a token that represents their share in the liquidity pool - so you're swapping your crypto for another asset.

Crypto-to-crypto swaps are a taxable event as you're disposing of one asset for another - even if you then get that asset back later, you're still swapping a token for it. This could be subject to Capital Gains Tax. If the CRA do think of moving liquidity as a disposition where LP tokens are involved - then it's likely that any gas fees you pay as a result would be deductible as they can be thought of as transaction fees related to a buy or sell.

It's important to note the CRA hasn't given any guidance on this yet - so you should speak to an experienced crypto accountant who can advise you on these transactions. The CRA has no specific guidance on how airdrops and forks are taxed in Canada - but we can infer their tax treatment from their guidance on what is considered business income.

F orks and airdrops are unlikely to be taxed as income on receipt, but you will pay Capital Gains Tax when you later sell coins or tokens you received from an airdrop or hard fork. The Canada Revenue Agency is unlikely to view airdrops as a type of income, as long as you're seen to be trading as an individual and not as a business. However, you will pay tax when you later spend, swap, gift or sell coins or tokens received from an airdrop.

Crypto you received from an airdrop will be treated the same as any other crypto when you later spend, swap, gift or sell it. So you'll pay Capital Gains Tax when you dispose of this crypto. Your cost basis is zero, so your entire proceeds are considered a capital gain. You receive 1INCH tokens from an airdrop. To calculate your capital gains, subtract your cost basis from the sale price. So for individual investors, it's likely you wouldn't pay any tax when you receive coins from a hard fork.

But you will pay Capital Gains Tax on your crypto assets at the point you dispose of them by selling, swapping, spending or gifting them. Gifting crypto in Canada is seen as a disposition of an asset and it's subject to Capital Gains Tax. But donating crypto to a registered charity is a tax free event. When you give a crypto as a gift in Canada, you'll pay Capital Gains Tax on any profit.

This is seen as a disposition of an asset by the CRA. The recipient of the gift uses the FMV of the asset the day they received it as their cost basis should they later wish to sell it. Remember, you'll only pay Capital Gains Tax on half of any capital gain.

As your gift is viewed as a disposition, Capital Gains Tax applies. The gift recipient will be liable for capital gains tax when they dispose of the assets. Donating crypto is tax free in Canada - so find a worthy cause and spread the love. Make sure you donate to a qualifying donee - so a registered charity. You can confirm the registered status of a charity on the Canadian government's website. Other worthy causes like crowd funders may not qualify. The news keeps on getting better because you can also use donations to reduce your tax bill if you qualify for the Charitable Tax Credit.

Any unused donations can be carried forward for the next 5 tax years. The CRA guidance on crypto mining tax all revolves around the scale and intentions of your crypto mining activities. If you're seen to be acting as an individual , you'll only pay Capital Gains Tax when you dispose of mined crypto. If your mining is more akin to business income , you'll pay Income Tax instead. If the CRA view your crypto mining activities as a hobby - you won't pay Income Tax when you receive mined coins.

You will however pay Capital Gains Tax when you later dispose of mined coins by selling, swapping, spending or gifting them. Because the cost basis of mined coins is zero - all proceeds from a disposition are considered a capital gain. If you're in the business of mining, the cryptocurrency you hold is considered as inventory and you need to use one of the two methods to value it:.

Valuing each item at either its acquisition cost or its fair market value at the end of the year, whichever is lower. Valuing the entire inventory at its fair market value at the end of the year the price you would have to pay to replace an item or the amount you would receive if you sold an item.

You can use either the cost or the fair market value to value your inventory, whichever is lower. In fact, you can use the lower value for each specific cryptocurrency you have which makes tax planning even better. Here cost refers to "cost at which the taxpayer acquired the property" along with all reasonable costs incurred to buy the property. You also need to be consistent and use the same method to value your property, year-on-year.

It's also important to remember, of course, that the income from selling mined cryptocurrency will become part of your business income and be taxed accordingly. Costs associated with mining like electricity, equipment etc. Some cryptocurrencies don't use proof-of-work mining and instead use proof-of-stake PoS.

Examples of this include Polkadot, Solana, Avalanche and Cardano. Staking in this context serves a similar function to mining - a network participant gets selected to add the latest batch of transactions to the blockchain and earn crypto in exchange. Staking through PoS helps secure the blockchain - by staking you are part of the process of creating new tokens.

This is different to other forms of staking such as DeFi lending, where you effectively lend your crypto through a protocol such as AAVE and receive interest in the form of crypto from borrowers on the other side of the transaction. The taxable amount will be the FMV of the tokens earned through staking on the date they are received. You will also pay Capital Gains Tax when you later dispose of the tokens earned from staking if you sell, swap, spend or gift them. The base cost will be the FMV on the date you received the tokens.

Meanwhile, the disposition price will be the FMV on the day you sell, swap, spend or gift the tokens. The tax treatment of crypto margin trading, derivatives products like Bitcoin futures and other CFDs all depends on whether you're seen to be acting as a day trader or an individual investor.

So it will all depend on the scale at which you're trading - but let's look at both scenarios and the taxation. If you're seen to be trading as an private investor - you'll pay Capital Gains Tax on profits from margin trades, derivatives and other CFDs. So when you open a position, you won't pay tax. It's only when you close your position that you'll realize a capital gain or loss and pay Capital Gains Tax on any profits.

In the instance of liquidation - when your collateral is sold - this is a disposition from a tax perspective. Like above, you won't pay tax when you open a position in a margin trade, derivative or another CFD - you'll pay tax at the point you close the sale.

This doesn't mean you won't pay tax on DeFi investments - it just means you need to look at the current crypto tax rules in Canada and infer the likely tax treatment of DeFi investments. As we already know from this guide, the tax treatment of crypto in Canada all boils down to whether it's seen as business income or a capital gain.

You'll have business income anytime you're intending to make a profit or if you have regular and repetitive activities. That's going to be the case for the majority of DeFi investors which means it's likely a lot of your DeFi investments are going to be taxed as income , not as a capital gain. Anytime you're 'earning' crypto - like business income - this is likely to be subject to Income Tax.

Meanwhile, anytime you're disposing of crypto - this is likely to be subject to Capital Gains Tax. It is advisable to speak to an experienced tax accountant about your specific DeFi investments. This said, from the current rules, we can infer DeFi would likely be taxed as the following:.

As we already said, the tax treatment of your DeFi investments is all going to come down to whether the CRA views you as an individual investor or sees your crypto investments as more akin to business income. They decide this on a case-by-case basis - but if you're seen to be trading as an individual, you'll pay Capital Gains Tax on any profits, not Income Tax.

If your DeFi transactions are regular, repetitive, intending to make a profit or of a commercial nature, you'll pay Income Tax on the entirety of your profits from DeFi investments instead of Capital Gains Tax on half. The CRA decides what is deemed to be business income or capital gains on a case by case basis so you should speak to a tax advisor for further advice on how your investments may be viewed. NFTs are another area of crypto which have exploded in the past year. This means NFTs will be subject to the same tax rules as other crypto assets.

The tax treatment of the NFT will depend on how you interact with them. Simply minting or buying an NFT is not a taxable event. Creating and selling an NFT is akin to creating and selling any other product, and therefore qualifies as business income which will be subject to Income Tax. As well as this, farming NFTs for a staking reward will likely be considered to be income in the same way DeFi staking rewards would be.

They are effectively member-owned communities without central leadership. Instead of a small Board of Directors making decisions about the company, DAOs enable the community of token holders members to vote on the future of the organization. A good example of this is Uniswap. Holders of UNI tokens vote on issues relating to the protocol - for example, how transaction fees are used and what new features to add.

For example, they might receive a share of the profits which result from the activities of the DAO or they might sell their DAO tokens to investors. However, given the DAO is not a registered entity in any jurisdiction and has no central control, it cannot pay taxes itself. Under this interpretation, any income passed on to the members of the DAO would likely be subject to Income Tax, and sale of DAO tokens which have appreciated since acquiring them would be subject to capital gains taxes.

Yes - spending crypto on goods or services is a disposition of an asset and it's subject to Capital Gains Tax. Whatever you're buying - if you're spending your crypto on goods and services, the CRA views this as a disposition of a capital asset.

You'll need to calculate any capital gain or loss by subtracting your cost basis from the fair market value of your crypto on the day you spent it. The CRA is fairly clear on the fact that you have to keep extensive records of your crypto transactions. The problem with exchanges is that there is no standard for the records they keep and how long they keep them.

This means that the onus is on the taxpayer to periodically export information from these exchanges to make sure they are maintaining meticulous records. You need to keep all of the required records along with supporting documents for at least six years from the end of the last tax year that the records relate to.

You can use Koinly for your record keeping without paying anything! Just sync your exchange accounts via read-only API keys and your blockchain wallets using your public keys or addresses. Koinly will then sync your transaction history automatically from time to time - so you'll always have great records of your crypto transactions.

It would be good practice to export all of your exchange data from Koinly at the end of each tax year. You should download and save this data so you have backing data in the event the exchange is unable to provide this in future. The CRA can challenge your cost basis if you do not have supporting evidence , so this could be vital to ensuring you do not end up paying too much tax.

Canada uses the adjusted cost basis method when calculating crypto capital gains and losses. This means you need to track the costs involved in acquiring your crypto assets carefully. This is simple to do at a small scale - so if you're only trading occasionally and you don't have a lot of assets. But if you're trading multiple assets of the same kind over several years - this can get a lot trickier to keep track of.

For example, you have 20 ETH that you bought over the course of two years for different prices. In this case, the CRA say you can use the average cost of each property. In this case, you'd add up your total cost basis for a group of assets and divide it by the amount of assets in that pool to give you your cost basis.

So in the example above, you'd add up the cost basis for each ETH you purchased and divide it by 20 to get your cost basis for each ETH. This allows you to calculate your capital gain or loss when you dispose of that ETH over multiple transactions. The adjusted cost basis method is easily manipulated though. In theory, investors could simply sell multiple assets at a loss in a given pool and immediately buy them back to create artificial losses to reduce their tax bill.

This is what's known as a superficial loss or a wash sale and the CRA has a specific rule to prevent it. The Superficial Loss Rule kicks in when both of these conditions are met:. What all this means is if you sell and buy assets of a similar kind within a 30 day period - you can't offset these capital losses against your capital gains.

Note: interest expenses related to borrowing on a DeFi platform will not be deductible against capital gains. In Canada, where borrowing to buy an asset which only generates capital gains , the interest cost is not deductible against the capital gains.

But when borrowing to invest in a something which generates income, the interest can be deducted against that income. The Canadian financial year is the same as the calendar year so it runs from the 1st of January to the 31st of December every year. That means the tax year that Canadians are reporting on is 1 Jan to 31 Dec Canadians need to report crypto income, capital gains and losses to the CRA from 21 February to 30 April

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