Understanding Business Cryptocurrency: A Remarkable Guide of 2022

by | Jun 3, 2022

First things first, business cryptocurrency is taxable in Canada. Thus, anyone interested in investing in cryptocurrencies has to see the laws. In Mississauga, cryptocurrencies are becoming more popular and valuable. As a result, many people and businesses invest their money in them. 

This must be clarified for new people. So, Yogi & Associates have put together a step-by-step guide about cryptocurrency. We know it’s a pretty daunting task. But we will help you to get familiar with these fast-moving markets in Mississauga, Ontario – it’ll be worth it! So, don’t sweat it, as Yogi & Associates gave an easy guide to business cryptocurrency in this article. Please give it a read!

1. What Is Cryptocurrency?

It is a trading mechanism used for investment purposes. It’s conducted rather than protected through cryptography. Cryptocurrency doesn’t rely on banks to track transactions. Instead, it is a peer-to-peer payment system that slows anybody anywhere to send and accept trades.

“The more you dig deeper into crypto the more you will discover you know little about so many things in life. Keep learning and never stop!” ― Olawale Daniel

2. When Is Crypto Currency Subject To Taxation?

The majority of Canadians do not pay any taxes on their cryptocurrency assets. But performing any of the following can result in a tax bill:
  • Converting cryptocurrencies to Canadian dollars or other fiat currencies.
  • Using cryptocurrencies to buy products or services.
  • Providing cryptocurrency as a gift.
  • Buying and selling cryptocurrency.
  • Exchanging or trading cryptocurrencies, as well as converting between them.

3. Business Cryptocurrency:

In business cryptocurrency, you generate profit through routine transactions. It includes buying, selling, and promoting your product and services.

4. Four Indicators of Business Cryptocurrency:

  • If you intend to enjoy the sale of your crypto-currency.
  • Marketing for a product or service.
  • The activity-based on commercial reasons.
  • Plans for a professional matter.

5. Tax on Crypto Business Earnings:

Any income from the business cryptocurrency is chargeable 100% to tax. So, for example, if you sold crypto for $200,000 and gained $500 as a profit. Your entire $500 profit would be chargeable to tax. So, the following are the situations in which you must pay tax on your business cryptocurrency.

1. Federal Tax Bracket:

CRA has a defined tax rate on business income is 38%. After federal tax deductions, it becomes 28%. However, if you are running a small business, CRA treats you at low rates, i-e, 9% for some companies not receiving preferential tax treatment, a general tax of 13% applies to them.

Mining and Skating:

The income from cryptocurrency mining or staking could be a business tax rule. However, the CRA acknowledges that crypto mining or staking can be personal. For example, a hobby or a business activity, and evaluates cases.

2. Cryptocurrency As A Medium Of Exchange:

If you have a cryptocurrency inventory for your business, CRA requires you to test it yearly. Thus, CRA has defined two methods for inventory evaluation:
  • Whether you evaluate each item at its cost when required or act, its current face marketing value (FMV), whichever is low.
  • Evaluate the entire inventory at face market value (FMV) at the end of each year.

“At their core, crypto currencies are built around the principle of a universal, inviolable ledger, one that is made fully public and is constantly being verified by these high-powered computers, each essentially acting independently of the others.” – Paul Vigna

See our 2022 Easy Guide to Personal Cryptocurrency to learn about personal cryptocurrency.

Wrapping it up!

The Canada Revenue Agency has issued guidance on business cryptocurrency taxes in the country. But they aren’t always clear. For example, whether your crypto investment is business revenue or a capital gain, you’ll have to pay either Capital Gains Tax or Income Tax. That, of course, does not make things any clearer. But don’t worry; Yogi & Associates are here for you! We provide proper guidance to make things clear. So, feel free to contact us. You can visit us in Mississauga, and we will assist you throughout to make the tax process easy.

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