2018-03-14 08:21:28Inspiration and MotivationEnglishFind out how to use your alpha state to your advantage to have a more successful day of work. Consider incorporating positive habits into...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/Female-business-owner-plans-for-successful-day.jpghttps://quickbooks.intuit.com/ca/resources/inspiration-motivation/successful-workday-planning-small-business/Make the Most of the First 20 Minutes of Your Workday

Make the Most of the First 20 Minutes of Your Workday

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If your business accepts digital currencies, such as Bitcoin, it’s important to understand that the Canada Revenue Agency (CRA) views these payments as a barter transaction or a trade. When you trade or barter something for your business, you must report the fair market value, in Canadian dollars, of the item received or the service given as business revenue. Digital currency transactions become income on your tax statements, because at some point you either have to spend the digital currency or convert it to cash.

Figuring the Fair Market Value of a Digital Currency or Barter Transaction

Imagine that you accept a digital currency as payment for a batch of 50 widgets. You normally sell 50 widgets for $100, so this is the fair market value for your widgets. In this case, you claim $100 in revenue or income for the transaction. This happens regardless of what kind of digital currency you use, because the government of Canada only recognizes currency or coins made by the Canadian government as legal tender.

How to Report Digital Currency Payments on Your Taxes

After a digital currency transaction, you must convert the digital currency to Canadian dollars using the currency rate on the day of the transaction. You report that amount as income to the CRA. If you spend digital currency on business expenses, you should also convert the funds before reporting the business expense on your return. The CRA recommends using exchange rates from the Bank of Canada. Use Form T2125 to report business income for your taxes.

QuickBooks Online makes exchanging currency and documenting barter transactions easier, both of which help you at tax time by keeping accurate records. QuickBooks Online can help you maximize your tax deductions. Keep more of what you earn today.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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