As digital-currency continues to gain traction, it is essential for investors to be aware of the tax repercussions that come with their investments. Cosmos (ATOM) has become an incredibly popular cryptocurrency utilized on the Cosmos blockchain and so today we will dive into examining how owning and trading ATOM in Canada can affect taxes.
What is Cosmos (ATOM)?
Cosmos (ATOM) is a decentralized, digital currency used on the groundbreaking Cosmos blockchain. This cutting-edge network allows independent blockchains to communicate with one another via their central hub – creating an ecosystem of unprecedented interoperability and scalability.
How is Cosmos (ATOM) taxed in Canada?
When it comes to taxation, Cosmos (ATOM) in Canada falls into the same category as other digital currencies. The Canadian Revenue Agency has stated that cryptocurrencies are classified as commodities and any profits or losses derived from their exchange will be subject to capital gains tax. As such, when trading ATOM, holders need to keep this fact in mind and plan appropriately for taxes on any potential returns.
If you sell ATOM and make a profit, 50% of the gain will be subject to capital gains tax. Depending on your income tax bracket, this rate may vary – if held for less than a year, then it is regarded as short-term and taxed at your marginal rate; conversely, if held for more than one year then it is considered long-term with taxes reduced by half compared to the former instance.
Furthermore, when you are compensated in ATOM for goods or services, the fair market value of that ATOM at the time it is received should be declared as taxable income on your tax return. This means that you must account for the worth of any and all ATOM given to you.
Reporting Cosmos (ATOM) on your tax return
To accurately file your taxes, as an ATOM owner or trader it’s essential to track and report the following data:
- The date you acquired the ATOM
- The cost basis of the ATOM
- The date you sold or exchanged the ATOM
- The fair market value of the ATOM at the time of the sale or exchange
When filing your taxes, you’ll need to report the relevant investment information on Schedule 3 – this is specifically used for capital gains and losses. Additionally, don’t forget to also include the total amount of any related capital gains or losses on Schedule 4.
Staying up-to-date with your ATOM transactions is essential for accurate tax filing. Recording the cost basis and fair market value of each transaction will help you avoid any potential penalties due to inaccurate capital gains or losses reporting.
If you own or exchange ATOM, a renowned cryptocurrency in the Cosmos blockchain system, it is imperative to maintain accurate accounts of your transactions and report them on your tax return. To get the most out of your crypto investments- both legally and financially – consulting with an experienced professional can provide tremendous insight into any questions or worries you may have about taxes. Remember that ATOM is subject to capital gains taxation here in Canada!