Chartered Accountants Mumbai

Is Crypto Tax Fair?

TLDR: Not really. If anything they should probably be taxed like forex trading.

The idea behind crypto currencies is that it's a non-government currency, not property. However the government in many countries view crypto currencies as property with associated capital gains implications. Essentially what happens is that if you save money in crypto, then want to buy goods (or other crypto) with that crypto, you are going to have to keep track of any gains, which can quickly become a nightmare.

In contrast, forex trading is also taxed, however profits are summed at the end of the year and any gains are just additional income added on top of whatever else you earned for the year. This limits the chance that you didn’t sell high and held through the tax year, only to have to pay sometimes 60-70% tax on your remaining portfolio during a bear market, as has been the case with many of our users.

But does the government care? Probably not. It is a common strategy for the government to heavily tax things it doesn’t like, and as competition to fiat currency, you can be sure they don’t like crypto. And so we join the ranks of tobacco, alcohol, and gambling taxes.

If you can’t ban it, tax it.

All content in this article is general information only and does not constitute financial, tax or legal advice. It is not intended to be used by anyone for the purpose of financial advice, legal advice, tax advice, tax avoidance, promoting, marketing or recommending to any other party any matter addressed herein. For tax, financial or legal advice please consult your own professional.

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