This can be especially dangerous if you are unaware of it, and if you have kids who like to play Play 2 Earn games. What I am talking about is the fact that P2E game earnings are not tax-exempt. Meaning you have to, in most places, pay tax on your earnings.
If you are a parent
This is most definitely something you need to be aware of if you are a parent. And that is the fact that kids now are far more active online. And as more and more parts of the web get monetized. Meaning you as a user can earn money from it, it can be a real risk that your kid might be digging themself into a huge tax hole.
Adam Saville-Brown, regional head of tax software firm Koinly recounted something from the recent Australian Crypto Convention.
The nine-year-old kid…is mining, staking, creating Youtube and TikTok videos to the point that his dad had to bring him here today because he’s generating so much income,
I would argue that that kid is very lucky that they have a parent that is both aware of what their kid is doing and by all accounts approves of it. And was aware of the possible financial ramification this could have for the kid.
Know your region's tax laws
An example of just how complicated it can be. Saville-Brown goes on and explains that in Australia “If you’re a professional gamer, it’s possible that you’re running a business, so you’d be treated under such rules”. Meaning you now need to know those rules as well.
On top of that, you could either be “playing these games as an investor” or “playing these games as a trader”. According to the Australian Taxation Office, investors are subject to capital gains when they sell their assets, while traders doing the same thing would be seen as “trading stock in a business,” and thus any profits would be treated as ordinary income.
In short, you, or your kid, could get into a lot of problems completely unknowingly. Simply by making youtube videos, playing games, or doing tiktok videos.
I hope this post will make you aware of any potential tax problems in time. And that you will be able to deal with them before they grew out of hand. If you would like to support me and the content I make, please consider following me, reading my other posts, or why not do both instead.
See you on the interwebs!
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