Have you been seeking for online income opportunities? Or are you only interested in finding out more about cryptocurrencies and how it operates? Yogi & Associates can assist you, though! You may get a simple instruction to using personal cryptocurrency in Canada in 2022 from our accountants.
You’ve probably heard of cryptocurrency, the new digital payment method, if you’re a Canadian. Unfortunately, the majority of individuals only become aware of cryptocurrency during tax season. Most people instinctively link cryptocurrencies to finance and investments when they think about them. To receive income in this digital money, you do not need to be a financier or a hedge fund manager, though.
The most crucial indicator of economic health is personal income. It displays your overall spending on investments, purchases, and services. Your pay, wages and salaries, pension and welfare benefits, interest and dividend income, rental income, capital gains (the profit realised when an investment appreciates in value), and other sources are all included in this. Yogi & Associates are available to you at any moment if you need help resolving your questions.
1. The Function of Cryptocurrency:
A form of money called cryptocurrency can be used to buy and sell goods and services online. All of your transactions, including paying bills, investing, and buying and selling goods and services, take place digitally rather than physically when you acquire cryptocurrencies.
2. Personal Crypto Income Tax:
Personal income comes from a variety of sources, such as earnings and salary, government assistance such as welfare benefits, business ownership profits, and investment income.
“Learning how cryptocurrency works is like learning a new language. It is incredibly difficult at the beginning, but once it clicks it will stick with you forever.” ― Olawale Daniel
3. Tax on Personal Crypto Income:
1. Capital gain:
Whether you have had your assets for a long time or not, just 50% of a capital gain on personal income is taxed; the tax would still be 50%.
2. Capital Loss:
Only capital losses, not income reduction, can balance out other capital gains. Losses can be used to offset gains from the preceding three years if you have more losses than gains. If your earnings fall short of covering your losses, you can carry them over to future years to help offset increases.
3. Ordinary Income:
According to section 5(1) of the Income Tax Act, the amount of any cryptocurrency payments you make to your employees in the form of salaries or wages will be included in their taxable income.
4. Adjusted Cost Basis Accountings:
Any cryptocurrency taxpayer is required to revalue their goods using average cost.
If you purchase cryptocurrency at various prices, the average inventory will be determined for tax purposes.
Calculation on average:
|1 Unit||= $50|
|1 Unit||= $70|
|1 Unit||= $40|
|1 Unit||= $100|
|Sum of 4 units||= $260|
|Average 260/4||= $65 Average cost|
If you want to learn about business crypto income, you can see our article by clicking A Legal Guide to Business Cryptocurrency
The Bottom Line:
You have to pay taxes on your crypto earnings, and for that, you have to know all the rules and regulations. Therefore, if you are unclear about how cryptocurrency works in general, Yogi & Associates have you covered! We’ll make sure you have a better understanding of cryptocurrency profits and the taxes associated with them, and we’ll help you with the transaction at every stage. To use our services, please visit us in Mississauga or contact us online. In order to make your life easier, we’ll also make sure you file your taxes according to all rules and regulations.