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Tuesday, June 26, 2007

Linden Dollar Income Taxable in Australia

As we head into tax season here in Australia, we learn that Linden Dollar income has been determined to be taxable income by the Australian Taxation Office. Other governments, including our Scottish friend Gordos' lot are looking into it.

The always entertaining Laurel Papworth has the scoop.

“The real world value of a transaction may form part of your taxable income, even if it is in Linden dollars,” a spokeswoman for the Australian Tax Office told the paper. “If you are getting a monetary benefit then it’s not treated any differently - normal rules apply.”


Spoil sports and spoken like a true bureaucrat.

In Britain and the United States, income earned in a virtual currency such as Linden dollars is only taxable after it is converted into a real-life currency. A U.S. Congressional committee is investigating whether new laws need to be created to deal with the rapid growth of worlds like Second Life, although the committee’s chairman has said he is opposed to any “premature attempt to impose a tax on virtual economies.”


Nothing is free in this world. I will have to watch my dodgy SL transactions. I will see if Tom Paine can set me up with a tax haven island on SL.

Also interesting how few Australians are on Second Life. Around 3,000 total members. It may be a function of the shocking broadband speeds here. You also need a pretty woop dee doo computer to run it effectively. Certainly when you visit Australian focused sites, they are usually pretty empty.

40 comments:

Anonymous said...

What about VAT on stuff you buy in SL ? You could be paid in Linden,buy stuff there and only pay tax on what you need for their "real world" -thogh whats more real about saying a piece of coloured and embossed paper is worth XYZ Dollars I don't know...

Colin Campbell said...

I think that you should consult your appropriately qualified and licensed tax practitioner prior to making any transactions in Second Life. Wouldn't want to have a virtual audit.

fake consultant said...

a us perspective...

"Any time someone wins a tangible prize or award, the value is reportable as taxable income. An accumulation of "points" would not result in tax consequences, but redeeming or selling them for money, goods, or services would."
--us internal revenue service, in response to a private question.

more or less the irs position is that assets you gain in online worlds are taxable at time of sale.

the transactions are treated as either "barter exchanges" or as cash sales.

another issue is the requirement for marketmakers to report transactions. the article linked below suggests that the burden of having to report every transaction to the irs is why assets and avatars are often locked together, and why you have to sell an entire account, rather than single assets of that avatar.

here's the link:
http://72.14.253.104/search?q=cache:aP8eFmJ41McJ:www.law.ttu.edu/lawWeb/news/archives/2007/Taxing%2520Ones%2520and%2520Zeros-TNTarticle.pdf+linden+dollar,+irs&hl=en&ct=clnk&cd=4&gl=us&client=opera

fake consultant said...

a better link:

here

sorry about that

fake consultant said...

an additional question-how will second life and regulated politics interact?

--will linden "campaign donation" dollars or in-kind gifts be regulated, as real dollars are today?

--campaigns are time-limited as well. how will sl activity intersect with those laws?

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