The bitcoin space is relatively new for the accounting and tax sector, however, as per the CRA, bitcoin is treated as a bartered good when two parties agree to exchange goods or services for bitcoin.
For example, if a bitcoin is exchanged for a pair of Blue Jays tickets, the value of the bitcoin would be the value of those Blue Jays tickets.
At the same time, a bitcoin can be bought or sold like a commodity similar to oil, gold, etc. As such, gains or losses arising from such transactions can be treated as either taxable income or capital gains.
HST adds another level of complexity. Similar to gold, Bitcoin is an exempt item for HST purposes, and if your company is in the the business of buying and selling Bitcoin to the public, then your company would not be able to register for HST with the Canada Revenue Agency. As such no HST would be charged and collected on the sale of the Bitcoins.
However, assuming sales of over $30,000 for your business, if the bitcoin is exchanged for other goods or services, HST will be applicable on the goods or services.
For more information on how to account for bitcoin for your business, please contact MP Group.