Modern parents may need to watch their children’s games more closely. This is because some people may have to pay taxes on large Play-To-Earn games, according to crypto tax experts.
Adam Saville-Brown The head of regional tax software company Koinly said during the Australian Crypto Convention last week: Many people are unaware that play-to-earn (P2E) gaming revenue can be taxed just like crypto trading and investing.
“Parents should be worried about playing their children’s games like GTA because of the violence. […] But now parents need to be aware of the additional tax complexity.”
Saville-Brown said he was contacted during a meeting by the father of his nine-year-old son, concerned that his son was “making money” from P2E games.
“A 9-year-old … profited from mining, stakes, making videos on Youtube and TikTok to the point that his father had to bring him here today. Because he makes a lot of money,” Saville-Brown told Cointelegraph.
Koinly’s head of tax, Danny Talwar, explains that in Australia, if anyone plays a Play-To-Earn game, they will be considered a “Running a business” and potentially facing a “complex” tax situation.
“If you are a professional gamer It is possible that you are doing business. Therefore, you will be treated under such rules.”
This is even more complicated because players can “Play these games as an investor” or “Play these games as a trader”.
According to the Australian Tax Office Investors are required to profit from the sale of assets, while traders doing the same are viewed as “Trading shares in a business” and hence any profits will be treated as normal income.
A similar situation could occur in the United States, with US law firm Artav at Law. It reveals that the revenue generated by “all P2E” is complex. Because the type of income must be determined whether it comes from NFT or tokens, or earnings from stakes or airdrops?”
The US law firm states that whether it is called a token, or digital currency But these tokens are taxed like intangible assets and are subject to capital gains tax.