Qoin is a new form of cryptocurrency launched by Bartercard in partnership with AlphaWallet. The currency is based on the Quorum blockchain.
Members of the Qoin digital community can use Qoin in various ways. This includes within a business, for personal expenses or for currency investment or trading. Sometimes people use Qoin in multiple ways—for business, personal and trading.
Recently, Qoin merchant and accountant Becky Jeisman put together a video explaining how tax legislation works when it comes to Qoin.
Here’s what she covered.
Qoin is taxable
Becky says that while there’s some dispute about whether Qoin is a ‘true’ cryptocurrency or not, for tax purposes it is treated as such and is taxable.
For example, if you use it in your business as income and/or for expenses it is subject to taxation, including with regards to collection and payment of the GST.
Qoin and profit
Any profits you make from Qoin are taxable. For example, you might make gains through selling your Qoin, or due to increases in currency value.
How you use your Wallet will determine how any profit is calculated and taxed. Here are three scenarios:
- Holding onto Qoin—let’s say you make a sale and hold on to the Qoin in your Wallet to sell it one day for profit. In this case you are not using your Wallet as a trading account. This means when you cash it out any profits will be treated as capital gains, and may be subject to Capital Gains Tax.
- Qoin investment—if you are regularly buying and selling Qoin to make a profit, it is treated as trading stock in a similar way to shares. This means it may be taxed as regular income rather than as capital gains.
- Business transaction bank account—this applies where you use your Wallet to receive sales income or pay business expenses just as you might with a normal bank account. In this scenario, daily gains and losses in currency value would be taken into consideration.
Becky says that the “legislation around this can be really confusing”. Because of this she recommends speaking to your accountant or bookkeeper really early on to set up a plan for managing your Qoin, so you are “recording it correctly from day one”.
A particular issue is that Qoin is hard to track, as there are no business names associated with transactions, but rather a Wallet address.
Because of this, Becky highly recommends creating more than one wallet with your business profile, such as one for business transactions and one for personal use. This makes it easier to identify whether transactions relate to business or personal activities. All businesses should do this anyway but it’s even more important with Qoin, says Becky.
Lastly, Becky suggests setting up a spreadsheet to keep track of all transactions. Each transaction should be categorised by type—e.g. whether it relates to buying, selling, receiving income, or paying expenses.
If you’d like to know more about cryptocurrency and taxation, Becky can be contacted through Queensland accountancy and bookkeeping firm Orange Partners.