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Crypto-currency tax calculator with support for all popular wallets, exchanges, explorers and migration from other crypto tax platforms
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Is crypto.com supercharging an income or interest? #245

Closed Roadrunneruk closed 2 years ago

Roadrunneruk commented 2 years ago

I have run the BittyTax report on my crypto.com file and noticed that supercharger_reward_to_app_credited is converted to interest but I thought that any coins recieved under supercharging was seen as liquidity mining so is not interest. Have I missed interpreted it?

The below was pulled from crypto.com wed site

How is Crypto.com’s Supercharger different from Crypto.com Earn?

Crypto.com’s Supercharger only allows you to deposit CRO tokens, and you will earn rewards based on the current DeFi token being provided during the event. Meanwhile, Crypto.com’s Earn allows you to deposit many different currencies, and you will earn interest based on the currency that you’ve deposited. There are quite a bit of differences between these 2 features. When you use Crypto.com Supercharger, you are taking part in liquidity mining. So far, you are only able to add CRO into the liquidity pool. Meanwhile for Crypto.com Earn, you are lending out your crypto and receiving interest. You can lend out a wide variety of currencies, like BTC to even VET. In return, you will receive interest in the currency that you’ve loaned out.

nanonano commented 2 years ago

What transaction type do you think it should be?

Roadrunneruk commented 2 years ago
I would say Staking as in my case I got as example Eth coins

Interest | 0.00006679 | ETH | £0.13 |   |   |   |   |   |   | Crypto.com | 2022-02-22 14:39:59 |   | 2022-02-22 14:39:59 | Supercharger Reward | ETH | 0.00006679 |   |   | GBP | 0.13 | 0.171282566 | supercharger_reward_to_app_credited -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | --
 but maybe someone on the site has more in depth knowledge.

from https://koinly.io/guides/hmrc-cryptocurrency-tax-guide/  it state the following

Income Tax on crypto UK

Now we've covered everything you need to know about crypto capital gains, let's look at crypto income and Income Tax.

There are cases where crypto is treated as income and thus attracts Income Tax. Cryptocurrency transactions that are classified as income are taxed at your regular Income Tax band. In some instances, you'll also need to make National Insurance contributions on income from crypto too.

In the UK, crypto is taxed as Income when it comes from:

HMRC has finally released guidance on DeFi transactions - in particular lending and staking. But it doesn't really clarify anything. The guidance now states that DeFi transactions may be subject to Income Tax or Capital Gains Tax depending on the "nature of the transaction" and whether that transaction has the nature of capital or the nature of income. If your DeFi activities have the 'nature of income', they'll be subject to Income Tax.

In general, Income Tax will only apply to 'returns' from activities, so rewards from staking, yield farming, lending and more could be considered income and subject to Income Tax. HMRC say it's likely to be considered income if:

  • The return to be received has been agreed - as opposed to speculative and unknown.
  • If the return is paid by the borrower/DeFi platform.
  • If the return is paid periodically throughout the period of lending/staking.

So if you're earning new coins or tokens, potentially at an agreed APY through a DeFi protocol - it's likely this would be seen as income. Therefore this could include:

  • Earning new crypto tokens through yield farming on lending protocol like AAVE, Compound.
  • Earning new liquidity pool tokens, governance or reward tokens.
  • Lending your crypto to platforms like NEXO to earn interest.
  • Earn crypto dividends on platforms like CoinRabbit.
I would say Staking as in my case I got as example Eth coins Interest 0.00006679 ETH £0.13 Crypto.com 2022-02-22 14:39:59 2022-02-22 14:39:59 Supercharger Reward ETH 0.00006679 GBP 0.13 0.171282566 supercharger_reward_to_app_credited but maybe someone on the site has more in depth knowledge. from https://koinly.io/guides/hmrc-cryptocurrency-tax-guide/ it state the following Income Tax on crypto UK Now we've covered everything you need to know about crypto capital gains, let's look at crypto income and Income Tax. There are cases where crypto is treated as income and thus attracts Income Tax. Cryptocurrency transactions that are classified as income are taxed at your regular Income Tax band. In some instances, you'll also need to make National Insurance contributions on income from crypto too. In the UK, crypto is taxed as Income when it comes from: Getting [paid](https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto21100) in crypto - known as '[money's worth'](https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto21100) and is subject to National Insurance too. [Staking rewards](https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto21200) [Mining tokens](https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto21150) Airdrops - in [most instances](https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto21250). [HMRC](https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto60000) has finally released guidance on DeFi transactions - in particular lending and staking. But it doesn't really clarify anything. The guidance now states that DeFi transactions may be subject to Income Tax or Capital Gains Tax depending on the "nature of the transaction" and whether that transaction has the nature of capital or the nature of income. If your DeFi activities have the 'nature of income', they'll be subject to Income Tax. In general, Income Tax will only apply to 'returns' from activities, so rewards from staking, yield farming, lending and more could be considered income and subject to Income Tax. [HMRC](https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto61214) say it's likely to be considered income if: The return to be received has been agreed - as opposed to speculative and unknown. If the return is paid by the borrower/DeFi platform. If the return is paid periodically throughout the period of lending/staking. So if you're earning new coins or tokens, potentially at an agreed APY through a DeFi protocol - it's likely this would be seen as income. Therefore this could include: Earning new crypto tokens through yield farming on lending protocol like AAVE, Compound. Earning new liquidity pool tokens, governance or reward tokens. Lending your crypto to platforms like NEXO to earn interest. Earn crypto dividends on platforms like CoinRabbit.
nanonano commented 2 years ago

I can change the transaction type to Staking but it will all end up as misc. income so does not really make any difference if it's labelled as Interest or Staking. Both appear in the income report.

Roadrunneruk commented 2 years ago

I'm no expert but when you fill out your self assessment form these as section for interest, which I believe you can earn £1000 before paying any tax, so if it all goes down as interest you may be not paying enough tax, I know nobody like paying tax.

As I said I'm no export and could be completely wrong

nanonano commented 2 years ago

You can't claim "crypto" interest in the same way as bank interest, it has to go down as misc income, I believe this was clarified in the latest HMRC DeFi guidance.

Roadrunneruk commented 2 years ago

Thanks for pointing that out, have looked at Guidance and your correct, so better leaving transaction type the same, thanks for clearing this up.

Thanks Roadrunneruk

Roadrunneruk commented 2 years ago

I would say Staking as in my case I got as example Eth coins

Interest 0.00006679 ETH £0.13

Crypto.com 2022-02-22 14:39:59 2022-02-22 14:39:59 Supercharger Reward ETH 0.00006679

GBP 0.13 0.171282566 supercharger_reward_to_app_credited but maybe someone on the site has more in depth knowledge.

from https://koinly.io/guides/hmrc-cryptocurrency-tax-guide/ it state the following Income Tax on crypto UK

Now we've covered everything you need to know about crypto capital gains, let's look at crypto income and Income Tax.

There are cases where crypto is treated as income and thus attracts Income Tax. Cryptocurrency transactions that are classified as income are taxed at your regular Income Tax band. In some instances, you'll also need to make National Insurance contributions on income from crypto too.

In the UK, crypto is taxed as Income when it comes from:

HMRC https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto60000 has finally released guidance on DeFi transactions - in particular lending and staking. But it doesn't really clarify anything. The guidance now states that DeFi transactions may be subject to Income Tax or Capital Gains Tax depending on the "nature of the transaction" and whether that transaction has the nature of capital or the nature of income. If your DeFi activities have the 'nature of income', they'll be subject to Income Tax.

In general, Income Tax will only apply to 'returns' from activities, so rewards from staking, yield farming, lending and more could be considered income and subject to Income Tax. HMRC https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto61214 say it's likely to be considered income if:

So if you're earning new coins or tokens, potentially at an agreed APY through a DeFi protocol - it's likely this would be seen as income. Therefore this could include:

On Mon, 28 Mar 2022 at 09:02, Scott Green @.***> wrote:

What transaction type do you think it should be?

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