A new bill in the US, the Virtual Currency Tax Fairness Act, is set to make small crypto transactions of $50 and less, tax-free. It will eliminate capital gains tax on purchases less than $50. This new law is attributed to Senator Pat Toomey of Pennsylvania and Senator Kyrsten Sinema of Arizona.
The Virtual Currency Tax Fairness Act focuses on simplifying the use of digital payments for everyday purchases. It wants to make sure that citizens are not subjected to surprise taxes when using digital currency for lower-value payments.
Senator Toomey believes crypto has the potential to become part of our everyday lives, but the current tax code stands in the way. He has teamed up with Senator Sinema to make it easier to use digital currencies as a common method of payment by exempting from taxes on small personal transactions. The new legislation will remove capital gains tax on purchases, including goods and services, less than $50. It’s a positive step forward for the United States. It should be noted that the bill is yet to be approved.
Kelly Canty, CEO of Ledgible, said it seems to be indexed for inflation because $50 is now going to be pretty meaningless going forward. The bill includes an aggregation rule to prevent buyers and sellers from taking advantage of the policy. It treats all sales or exchanges that are part of the same transaction as one sale or exchange. Through this new bill, the lawmakers intend to prohibit someone from breaking up a single purchase into numerous transactions under $50 for each of the virtual currency exchanges to qualify for the de minimis exemption.
An expert explained that if a person were to purchase something that is $500 with crypto, without the aggregation rule, the purchase could be broken into 10 separate transactions and design the system to qualify for the de minimis exemption. This is where the aggregation rule comes in. It treats all the 10 transactions as it really is, that is one $500 transaction. Thus, the transaction would not be eligible for the de minimis exemption.