If the old version dies, any you are left with a new version, I’d say it is definitely different.
The one you owned is no more and replaced with another.
Edit.
Although, if your old one went to 0 that is calculated as a loss, if the new one is cheaper you would owe no taxes.
You’re making the mistake in thinking that tax authorities are rational and entirely logical in their decision making. That’s not really their job, is it? They are there as enforcement of a political tool, designed in part influence behaviour.
It also assumes they have the ability to keep pace with technological change; whereas they are usually decades behind.
10 Likes
If you have to burn a coin for a decentralized network to mint a token then is that really an exchange? No one has the coin any more. If a decentralized network mints tokens under your control then somehow that is a gift and taxable event in the UK? Bonkers. Just seems like there could or should be a way but it’s like UK tax authorities will tax anything that comes into your “possession”.
2 Likes
It’s a mess, we will have to invest in some consultants and get opinions from HMRC and the FCA here. I feel we are in a strong position though so it should be fine, but we will have hurdles for sure. At least we know we are walking into a fog, so we will make sure and be very well prepared.
Of course as a fully remote company we are not tied to the UK if doing so harms the project. A switch is far far from simple so not a knee jerk in any way, but it’s likely we will have to look at all options in great detail as we have not only shareholders to consider but also other stakeholders like the community, MAID holders, team and more.
5 Likes
Airdrops in most countries are taxed as normal income
In the UK, gifts received are not generally taxable, but giving gifts is a disposal.
Airdrops that are given without needing to do something in return come under capital gains tax not income tax. If you need to do something to earn the airdrop, it’s income tax.
That’s a good point. Irreversibly burning a token that has a tradable value would likely be considered a complete loss for CGT purposes in UK (edit: everyone may need their own burn address, and to do a ‘negligible value’ claim with HMRC - I don’t know how easy that is… could be complex).
If an airdrop were given of a different token of equal value based on that token burn, it would likely come under capital gains tax vs income tax, and the loss could be carried against the gain. If the new token isn’t yet tradable, the burn loss could be kept against future gains & the cost basis of the new token be zero.
Worth asking a pro about this, as it could work well at least for those in the UK.
I just heard this morning that my Portuguese visa has been approved, so I should be fine as long as Portugal doesn’t change their rules any time soon & keeps zero CGT on crypto for non-traders.
7 Likes
Purposeful destruction is a disposal at the value you did this AFAIK. So CGT would be paid at that time. Unless the thing you burned had zero value (not listed on exchanges). As you say though it’s all vague and that is scary as HMRC will pounce on vague and tax you on gray areas. It seems to always fall their way.
3 Likes
Wow. That’s crazy - so if you prove you’ve lost something, because it’s on purpose they won’t count the loss as a loss?
I can’t see anything about this in the HMRC guide from a quick look (CG13120 - Introduction and computation: occasions of charge: assets lost/destroyed/negligible value: introduction - HMRC internal manual - GOV.UK). It seems that if it’s demonstrably destroyed, it should be able to be considered a loss, but there may well be a bit about purposeful destruction that I couldn’t see in a quick search.
What a minefield!
The bottom line!
It’s a shame and the FCA and HMRC write of crypto as the enemy when you read it, especially the BOE and FCA. Considering the ex BOE dude now works for coinbase!! a complete shamathon.
If you lose a wallet or key you need to write to them and have them agree it’s actually lost. If the address shows coins moved to a burn address then I recon you’re in trouble.
1 Like
It isn’t daft IMO. If you get something in exchange for the burn it’s legitimate to see that as either an exchange or a disposal.
If you burned your MAID and then got nothing, that would be a total loss, although if you deliberately destroyed value you might well have difficulty claiming that as a loss.
Most of this is sensible IMO except for treating every trade as a disposal. Things would be much simpler and fairer if disposal was only at the point you move from cryptocurrency to buying a service / real world property / fiat.
Although thinking about this, maybe they don’t do this because it could be open to abuse, tying things up in NFTs, DeFi instruments etc, washing, or trading into untraceable crypto. That makes sense actually.
There are still problems in that none of this was clear until about 2018, much of it still is unclear, and rules seem to be being applied overly harshly and retrospectively, often punishing people trying to do the right thing.
2 Likes
This is my issue. If you are honest you become a target and man do they come at you! However if you don’t declare stuff then it’s almost impossible for them to know and you go on about life peacefully. So there is a strong incentive for dishonesty and harsh penalties for honesty. That grates on a me a lot, as I suppose folk are fed up hearing, but I really think society should promote honesty, not reward it but just don’t use it as the stick to beat us with.
It’s like being forced to play “the game” and that means evade at all costs while they chase the mugs who were honest. Survival of the corrupt and I hate it with a passion.
7 Likes
This really is terrible David. I’ve only had three direct encounters with HMRC and all were absolutely fine. First a routine audit of my sole proprietor business after I registered for VAT in the eighties. They found some stuff I shouldn’t have claimed, fair enough! I wasn’t ever audited after that in over twenty years, or even when I de-registered.
Second was negotiating the value to be placed on some options I converted to shares. We haggled by letter and I got my way. It was over peanuts really so they could have just insisted point blank. That was late nineties.
Finally in the noughties I cashed in some shares and worked out the tax myself which was quite complex and reduced the CGT due substantially. I got a tax accountant to agree it and submit my calculation without change, and it was accepted without a query.
Fingers crossed for next time!
2 Likes
I think you’re right - viewing the burn and issuance together, it’s fair to see it as an exchange, because that is what it is. It would be an obvious loophole if they didn’t consider the two connected, so scrap that idea!
2 Likes
I wondered about the dynamics of this on the other thread, is this far off the mark?
-
When SN launches it appears that the only people lined up to get a concrete “slice” of it before launch are Maid holders with a Maid->SNT transition.
-
MaidSafe the company has shareholders and part owners, employees/core team etc that are all stakeholders in the company. That makes them stakeholders in any Maid the company holds now or will farm in the future which also represents their slice of the future SN, plus they are also stakeholders in any extra ongoing future business periphery to the SN such as setting up private SN’s for multinationals and other similar projects that I remember being discussed way back when. Maid holders by themselves are not stakeholders in any of that extra opportunity.
-
“Community” falls into those general groups plus a few others that don’t have any more formal stake at all.
Contrasting with other projects in the decentralised space, there are a few UK companies who play important roles in the development of decentralised projects (e.g. parity.io). They do the majority of important development but they are not 100% the center of the project. Distributed networks of token holders (just like Maid holders) are also part of the decision process via various simple to complex governance systems. This setup protects both the company/employees from being 100% responsible, and the decentralised token holders from being beholden to any one countries archaic legals codes. Both benefit from the decentralisation.
I only bring this up again since it seems to me unnecessarily drastic uprooting MaidSafe the company, rather that keeping it but distributing out from it and around it like other projects in similar positions have done. Perhaps a chat with one of these other companies like Parity could be productive.
1 Like
Only shareholders. 5% of SNT is paid to them (includes staff through an employee benefit trust, so all staff not just employees as we don’t discriminate). Shareholders can swap shares for SNT.
Yes it would be dramatic, it’s a good idea to talk to others though. Let’s see what transpires. Thx for tip
2 Likes
Realistically what is a given nationstate going to do? Ban printers? They CAN’T ban the SAFE network without crippling the internet at large. And they can’t prevent people from trading DBCs since they are single use items traded from point A to B and can be reproduced by anyone with common equipment. A law that is not enforceable means nothing. Pirating copywritten material is also illegal but no one cares about the legality of downloading music off the net to put on their phone. The only people that making the SAFE network illegal would hurt would be legit businesses that pay taxes and help grow the economy and pay political pensions and political campaigns. And at some point fiat money using and tax paying busineses will start losing money as they start competing with their more crypto friendly under the counter SAFE network competitors.
I like how you think but you might want to explain a bit more how this works.
Sorry if I’m financially dense. How is this of a benefit as far as taxation goes or saving oneself money or headaches? I’m not really following the logic here.
If you were forced to swap all maid for snt, and your country classes it as a taxable event, on conversion you would would likely incur a tax bill.
Eg. If you bought maid for 10c
And snt is worth 1.10 at conversion,
For every maid you convert you would owe taxes on $1.
So if your forced to convert 100,000 at launch, you owe taxes on 100k, so would probably need to sell x % of your stash purely because you converted.
Edit.
If you only want 10k converted to get you going and keep 90k till you want them , you only owe taxes on 10k ( under cap gain limits in UK) so no taxes due.
3 Likes
Doesn’t forcing people to sell off their maid undermine the whole purpose of buying it in the first place?