Gift Tax for BitCoin
I heard that the government delayed taxation on Bitcoin by one year.
I'm going to give Bitcoin as a gift to my friend who usually gives advice on this and that, but I wonder if I don't have to pay attention to the issue of gift tax this year.
Ya~ politicians are keep changing policies for the vote!
Hot interest in virtual assets such as cryptocurrency continues this year, and as above, income tax (other income) on virtual assets transfer gains or investment gains seems to be suspended for a year due to the implementation in 2023.
However, it should be noted that in terms of inheritance or gift of virtual assets, they are still subject to taxation.
In the case of income tax, only income listed in the Income Tax Act (interest, dividends, business, work, pensions, other, retirement, transfer) can be taxed, and the specific scope of taxation must be separately stipulated in the Act. Therefore, it was difficult to find a basis for taxation of income tax on capital gains or investment gains on virtual assets until the 'income tax law' was revised accordingly.
However, in the case of earned income, it can be taxed under the existing Income Tax Act, and it should be noted that if a company pays wages, salary or incentives as virtual assets (regardless of whether or not it violates Article 43 of the Labor Standards Act), the income tax of the employees must be withheld.
Articles 2, No. 3 and 7 of the Inheritance and Gift Tax Act broadly stipulate "all goods of economic value that can be converted into money" and "all legal or 'de facto' rights of property value" (inheritance and gift tax) or "all economic benefits that can be converted into money" as tax.
Regardless of the legal nature of virtual assets, inheritance tax or gift tax can be levied as long as its economic value is recognized, and if virtual assets are transferred or transferred to a third party's electronic wallet, they can be subject to gift tax.
If you transfer or transfer electronic wallets between individuals without an exchange, there may be an assessment that the gift of virtual assets is unlikely to be realistically taxed in that it is not easy to find them at the tax office like exchanging cash.
However, it should be noted that the recipient may be subject to an investigation of the source of funds by the tax office as he or she cashed in virtual assets to purchase expensive assets such as apartments or cars or deposit them in financial institution accounts.
In other words, in the process of clarifying the source of funds to the tax office, gift tax on the transfer or transmission of virtual assets may be levied.
It can also be a question of how to evaluate the value of virtual assets subject to taxation in relation to inheritance tax or gift tax. The recently announced amendment to the Inheritance Tax and Gift Tax Act will be based on the average price of two months before and after the inheritance date or gift date of the virtual asset exchange (currently four Upbit, Bithumb, Kobit, and Coinone) announced by the head of the National Tax Service from January 2022.
Until legislation, there were no clear criteria for valuation of virtual assets, so there were many arguments between tax authorities and taxpayers over the criteria for evaluating the closing price of the exchange or the average price on the day before inheritance or gift was made.
In addition, it was questioned whether individual exchange prices could be used as the basis for calculating the taxable amount until only a small amount of virtual assets are circulated without legal basis, so it is understood that the revision was made to clear the confusion. In conclusion, it is true that taxation on investment gains or capital gains of virtual assets will not take place until this year, but we should continue to pay attention in terms of inheritance and gift.