The Tax Man Comes To Virtual Australia

shadrach_au writes to mention that what was being considered in the states is now apparently policy down under: your virtual assets can be taxed. The Australian Tax Office (ATO) is warning citizens to consider whether their gaming 'is a hobby or a business' and act accordingly. From the article: "If a virtual transaction has real world implications — if it can be attributed a monetary value — it attracts the attention of the Tax Office. Sites such as slexchange.com set rates for swapping Second Life's Linden dollars for 'real' money. 'The real world value of a transaction may form part of your taxable income, even if it is in Linden dollars,' the ATO spokeswoman says. 'In addition, there may be GST (goods and services tax) to consider.' In other words, if you are turning over the equivalent of more than $50,000 selling virtual jewelery to Second Life avatars, you must get an ABN (Australian Business Number) and register for GST."

It's still a real world transaction

[Joe U]

It's still a real world transaction, so it shouldn't come as a surprise that it's taxable.

If you design graphic artwork for a website, you get taxed when you get paid for the work, even though it's not something designed to be used outside of the computer.

Game pieces are really no different.

Re:like currency

[TheSHAD0W]

That could actually be really bad. I've seen problems occur w/ that sort of transaction: The government assesses a levy in AU$ on your L$ income - but by the time you're ready to pay the levy, something happens to the exchange rate and you're toast.

This happened to some people when Enron fell apart: They took a stock option deal, and incurred a tax on the difference between the option price and the value at the time of acceptance; but by the time the stock actually vested, it was worthless. They were still stuck with the levy, and it bankrupted them.

Ronnie said it best...

[Stormwatch]

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. - Ronald Wilson Reagan

Re:I support this

[Harinezumi]

Virtual currency should be taxed when, and only when, real-world currency is exchanged for it. Until such a point no taxable transaction takes place, since any goods exchanged between characters in-game remain the property of the game operator before, after, and during the transaction.

Once real money enters the picture, though, the transaction becomes as taxable as any other exchange of money for services.