CRYPTO NEWS

Estimating Cryptocurrency Tax Gap

Estimating Cryptocurrency Tax Gap

I’m trying to do a rough estimate for the tax gap for cryptocurrency in Canada and I’m having a hard time producing it due to a lack of data on the topic. The tax gap is the amount of tax not paid that should have been paid, so it’s a type of measure of non-compliance with tax laws. In Canada, crypto assets are taxed when they are disposed of. They are taxed under business income or capital gains and could also be taxed under GST/HST. Business income tax applies to the full amount and capital gains tax applies to only 50% of the amount.

I am new to cryptocurrency and not quite familiar with the best data sources to look at. So far, here are my ideas to give a rough estimate of a possible upper bound for the tax gap:

Given that x% of the global cryptocurrency market is based in Canada, approximately $y in crypto transactions can be sourced to Canada. Under a very extreme assumption that all Canada attributed volume reflects unreported income taxable at the top rate of z%, cryptocurrency would contribute roughly $(zy%) to the tax gap, with the actual tax gap value being much lower. This $ (zy%) would serve as an upper bound. There are obvious issues with the estimate, hence why it is a very rough estimate.

To do this estimate, I need to figure out what the values of x% and $y are. Any suggested data sources to look at for this?

If anyone has suggestions of how I can formulate a better upper estimate or approximate a lower bound estimate, or if there are any good data sources to look at that could help me formulate a better estimate, it would be appreciated.

Thank you!

Crypto Hats, Crypto Shirts, Crypto Socks, Crypto Clothing

Unexpected Behavior Working in Prime Order Subgroup with Java BigInteger Class

I’m implementing a searchable symmetric encryption scheme, developed by others, for my own personal enrichment. The original research is located at the link: https://eprint.iacr.org/2013/169. I’m using the BigInteger class in Java to perform the group operations. The scheme splits the exponentiation between the client and the server so as to prevent information leakage to the::Listen

I’m implementing a searchable symmetric encryption scheme, developed by others, for my own personal enrichment. The original research is located at the link: https://eprint.iacr.org/2013/169. I’m using the BigInteger class in Java to perform the group operations. The scheme splits the exponentiation between the client and the server so as to prevent information leakage to the server. I generate a value xtag, as illustrated below:

BigInteger exp = z.multiply(ithTermDigest).multiply(y).mod(p); // This works as expected
BigInteger xtag = g.modPow(exp, p); // This works as expected

z is a pseudorandom element of prime order subgroup Zp.
ithTermDigest is a pseudorandom element of prime order subgroup Zp.
y is the modular inverse of z multiplied by a a pseudorandom element of prime order subgroup Zp, and is used as a "blinding factor" for the server.
g is a generator of the group.

The above code works as expected. The value z and it’s inverse in y cancel out to leave ithTermDigest * (the pseudorandom element of the group), and the correct value of xtag results.

What is vexing me is that the below code does not generate the same value for xtag:

//The client will compute this part and send xtoken to the server
BigInteger exp = z.multiply(ithTermDigest).mod(p);
BigInteger xtoken = g.modPow(exp, p);

//The server will compute this part using blinding factor y.
BigInteger xtag = xtoken.modPow(y, p);

The value for xtag does not mirror the previous result. I would expect gab to provide the same result as (ga)b. Are my expectations ill-founded? Is there anything obviously wrong? I don’t pretend to be a mathematician or a cryptographer. Please point me to an appropriate forum if this isn’t.

Estimating Cryptocurrency Tax Gap

Shopping cart
There are no products in the cart!
Continue shopping
0