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What are the Tax consequences for Cryptocurrency via rewards programs?
Some Cryptocurrency Projects have a reward program for participating in a network or specific use. This can be seen in Projects such as Lbry’s Credits or The Brave Browser’s “Brave ads” with their Brave Attention Token.
Last May I signed up for Lbry’s Creator Rewards program that was basically users Beta testing the software/network. It could be watch a video, follow X amount of people just to see how the network worked, then you’d received Lbry’s Credits (LBC) Which you could cash out or send to another user as a “Tip.” I only ever tipped users on the platform from the Crypto I’ve received as they would have more used of it than I would; I only wanted to see how the network worked for the time being and I did not want to get involved with exchanges at this point.
After reading over CRA’s Cryptocurrency Guide I have to wonder what these sorts of systems fall under, if any tax consequence at all?
Do these count as a barter transactions? If so what would need to do within Turbo Tax to file properly?
I kind of have a feeling that I need to upgrade since I have the Standard version of the software currently installed.
Thank you for your time, and I await any advice that could be offered.
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What are the Tax consequences for Cryptocurrency via rewards programs?
We appreciate you choosing TurboTax
The total amount of LBC earned in a year must be declared as income.
You have done disposition if you transfer your credit to someone else. A disposition is a way of getting rid of something, such as giving, selling, or transferring it. Owning or holding a cryptocurrency is generally not taxable. However, if you do any of the following, there may be tax consequences:
- Buy cryptocurrency or give it as a gift
- trade or exchange cryptocurrency, including disposing of one cryptocurrency for another
- as well as converting cryptocurrency to government-issued currency, such as Canadian dollars
- in order to buy goods or services
Please visit the links provided for further clarifications:
- CRA: Guide for cryptocurrency users and tax professionals
- CRA: Barter Transactions
- TurboTax article Bitcoin Explained with Your Tax Implications
- TurboTax FAQ How do I report the sale of cryptocurrency on my taxes?
- Community discussion Anyone here done a tax for cryptocurrencies? I don't know where to put them on the tax
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