Thursday, April 4, 2019

Tax losses related to QuadrigaCX insolvency

Hello. you've probably heard about the QuadrigaCX cryptocurrency exchange becoming insolvent and the 115,000 affected users that lost 250 millions $ worth of cryptos and $.

As someone else already pointed out on reddit, Quadriga is not officially insolvent yet so we cannot claim losses from insolvency at this point.

But in the event of the insolvency being accepted by the judge and sufficient proof of our claims (official documentation), I would like to know if whether or not we could claim capital losses to offset crypto capital gains from previous years.

For example, If my claim is 5,000 $ worth of bitcoins and 5,000 $CAD on the exchange (assuming that I don't retrieve anything after the proceedings), would I be able to claim 10,000$ of capital losses? (I'm claiming my trading gains and losses as capital gains/losses not business income)

Someone on reddit (source 1) mentioned that we could trigger the capital losses by filing an election under subsection 50(1) but when I talk to another accountant, he told me that it won't work unless we claim the losses as business income. (and even here there is "50% chances that it won't work")

When I read the CRA official documentation (source 2), it reads "The debt will be a capital loss in the following situations: You acquired it to earn income from a business or property". My debt was not to earn income from a business (it is personal gains) but could it be classified as property?

Source 1 : https://np.reddit.com/r/BitcoinCA/comments/an4kui/quadrigacx_and_losses_for_tax/

Source 2 : https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-127-capital-gains/completing-schedule-3/bonds-debentures-promissory-notes-other-similar-properties/debts.html

Thank you in advance for any clarifications you could provide. I'm quite certain that 115,000 affected users might be interested to hear about your expertise.

Lastly I would be truly grateful if you know any insolvency tax experts that you could direct me to to answer these questions.

Best,


No comments:

Post a Comment