How Bitcoins Can Impact Your Income Taxes

Operating with no central authority or bank, Bitcoin is one of many digital currencies (also knowns as cryptocurrencies) rising in popularity, which makes the related income tax rules even more pertinent than ever. The Canada Revenue Agency ("CRA") generally considers digital currencies, such as Bitcoin, as commodities for income tax purposes. The relevant income tax implications will vary depending on how the digital currency is used.

Digital Currency in Business

Canadian businesses that accept digital currencies as a means to pay for goods or services will be considered by the CRA to be carrying out barter transactions. A barter transaction is essentially a trade of goods or services without the exchange of money. Barter transactions are based on the concept that each person considers the property they receive to be of equal or more value than what they gave up.