Waterloo tech startup leader is paid in bitcoin
Small but growing number of Canadians accepting part or all of their salary in digital currency
Like many of the 20- and 30-somethings in the Waterloo, Ont. region, Andrew Finkle dedicates his days and nights to the dream of transforming his tech startup into a successful and sustainable business.
He's the co-founder and director of research and development at Structur3d Printing, which focuses on add-ons for desktop 3D printers with a focus on the home hobbyist crowd.
Finkle says his interest in the possibilities of 3D printing sparked around the same time he became fascinated with bitcoin, another technology that's been hot in the headlines.
"Originally I bought them not for investment purposes at all," said Finkle. "It was like 'Oh this is cool internet tokens that I can trade around and they have value.'"
As of Sept. 15, a single bitcoin is worth roughly $528. According to Wagepoint, a payroll firm in Waterloo, a small but growing number of employees at companies it serves are opting for the same option as Finkle, taking part or sometimes all of their salary in bitcoin.
If bitcoin does not succeed, I believe the technology will.- Andrew Finkle, co-founder at Structur3d Printing
The company's CEO, ShradRao, says his firm began offering a bitcoin option in its payroll system last November, but did not expect many people to adopt it. Since then, employees from about 10 firms have signed up for bitcoin payments, one of them being Structur3d Printing.
Rao says 80 per cent of employees who choose to receive their pay in bitcoin take all of their pay in the digital currency.
In Finkle's case, about 75 per cent of his take-home income is bitcoin.
"Personally I really believe in the technology," said Finkle. "I think long-term, if bitcoin does not succeed, I believe the technology will. It just makes the transaction of value so easy and so seamless."
Finkle adds it would also be beneficial if more of his company's financial transactions could be done with bitcoin.
"The potential for us to accept bitcoins for our product, for us to pay our suppliers and our employees in bitcoins, what this does is it reduces a lot of the fees that are involved and a lot of the time that is involved," said Finkle.
How does bitcoin get taxed?
While bitcoin gets around a lot of fees, the old saying about death and taxes applies.
In the early stages of bitcoin, the question of whether bitcoin could be taxed would have probably been considered by many to be redundant.
However, its rise in popularity was enough to make the Canadian government address its potential for criminality in the 2014 budget. Ottawa plans to change laws and regulations so that bitcoin or online casinos cannot be used to launder money or finance terrorism.
Last August, the Canada Revenue Agency said bitcoin users would have to pay taxes on transactions. But in January, a government official told The Wall Street Journal that Canada does not recognize bitcoin as legal tender. When it comes to the issue of taxation, there appear to be mixed messages from different government agencies.
As for the Bank of Canada, an emailed statement to CBC News said the agency is actively monitoring virtual currencies, but would take a greater interest when the currency achieves more financial stability.
If this is the case, how can the government tax currency it does not recognize as legal tender?
In Finkle's case, he says Wagepoint's system converts Canadian dollars to bitcoin after his initial Canadian dollar salary has been taxed.
"It's essentially like I've taken my paycheque and I've went and bought bitcoins," said Finkle. "So I will realize the capital gains [or losses] when I cash out the bitcoins."
Ling Chu, an associate professor from WilfridLaurier University’s School of Business and Economics who specializes in issues of taxation, says the only area where the government can really tax bitcoin is from capital gains made on sales.
But Chu adds it’s largely up to individuals to decide whether they will report such profits.
“Let’s say I sold you precious art, and then I pocket the money. That is probably not under government control,” said Chu. “However, it is your responsibility as a Canadian taxpayer to report that income. The government can only put out the policy for you to follow.”
Only a relatively small percentage of people are actually audited by the Canada Revenue Agency, Chu added.