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Tax Guide for Bondi Finance Investors

Introduction​

This guide provides essential tax information for investors holding Bond Tokens in Bondi Finance. As a platform for tokenizing real-world bonds on multiple blockchains, Bondi Finance enables participation in fixed-income assets through Bond Tokens.

Bondi Technology Inc. is domiciled in Panama, which operates on a territorial tax system. However, investors' tax obligations are determined by their country of residence. This guide aims to clarify potential tax implications of investment activities, enabling informed decision-making and regulatory compliance.

Note: This guide is not available to residents of the United States or countries under international sanctions, including but not limited to North Korea, Iran, and others listed by the Office of Foreign Assets Control (OFAC).

Investment Activities and Tax Implications​

Investors in Bondi Finance typically engage in three primary activities with potential tax consequences:

  1. Acquisition of Bond Tokens: When purchasing Bond Tokens, investors gain exposure to the underlying bonds. This transaction is generally not taxable, however it establishes the cost basis for future capital gains calculations.
  2. Disposition of Bond Tokens: The sale or redemption of Bond Tokens may result in capital gains or losses, calculated as the difference between the acquisition cost and sale price. This typically triggers capital gains tax obligations in most jurisdictions.
  3. Coupon Payments: Bond Token holdings generate periodic payments corresponding to the coupons of the underlying bonds. This is generally classified as income for tax purposes.

The tax treatment of these activities varies significantly by jurisdiction, necessitating an understanding of local regulations.

Panama's Tax Framework​

Bondi Technology Inc. is incorporated in Panama, which offers a unique tax environment based on a territorial tax system:

  • Territorial Taxation: Panama's tax system is based on the principle of territoriality. Income generated from activities conducted outside of Panama is generally not subject to Panamanian income tax.
  • No Capital Gains Tax on Foreign-Sourced Income: Profits from the sale of assets (like Bond Tokens) that are not derived from a Panamanian source are typically not taxed in Panama.
  • No Withholding Tax on Foreign-Sourced Payments: Payments of dividends or interest from foreign-sourced income are not subject to withholding tax in Panama.

This tax-neutral framework for foreign-sourced income benefits Bondi Finance's global operations. However, it is crucial for investors to understand that they remain subject to the tax laws of their country of residence, not Panama's regulations.

For additional information regarding Panama's tax system, please consult the official Dirección General de Ingresos (DGI).

Taxation Principles for Digital Assets​

Note: The information in this section is particularly important as it forms the foundation for understanding how Bond Tokens are treated for tax purposes.

Classification of Digital Tokens​

Tax authorities typically classify cryptocurrency tokens such as Bond Tokens under one of the following categories:

  • Property: Many jurisdictions treat digital assets as property for tax purposes, applying capital gains tax rules upon sale or exchange.
  • Investment Assets: Some regulatory frameworks categorize digital tokens specifically as investment assets, subject to investment income tax regulations.
  • Foreign Currency: Less commonly, digital assets may be classified as foreign currency, with applicable foreign exchange tax rules.

The classification within your jurisdiction is fundamental to determining applicable tax obligations.

Capital Gains and Losses​

The sale of Bond Tokens at a price exceeding the purchase price results in a capital gain. Conversely, selling at a lower price results in a capital loss. Key considerations include:

  • Holding Period: Many jurisdictions differentiate between short-term gains (assets held for less than a specified period, typically one year) and long-term gains, with preferential tax rates applied to the latter.
  • Cost Basis: The original acquisition value of the Bond Tokens in local currency, including any acquisition fees.
  • Calculation Methodology: Jurisdictions may require specific methods for calculating gains/losses, such as First-In-First-Out (FIFO), Last-In-First-Out (LIFO), or specific identification.

Coupon Income​

Coupon payments earned from Bond Token holdings are generally treated as ordinary income and taxed at applicable income tax rates. This treatment is analogous to interest earned from traditional financial instruments such as bonds.

Record-Keeping Requirements and Best Practices​

Maintaining comprehensive records is essential for accurate tax reporting. For each transaction, documentation should include:

  1. Transaction Date and Time: The precise timestamp of each purchase, sale, or coupon payment.
  2. Transaction Type: Classification as purchase, sale, or coupon receipt.
  3. Quantity: The number of Bond Tokens involved in the transaction.
  4. Value in Stablecoin (e.g., USDC): The amount denominated in a stablecoin at the time of the transaction.
  5. Value in Local Currency: The equivalent value in the investor's local currency, utilizing the exchange rate at the time of transaction.
  6. Transaction Fees: Any fees associated with the transaction.
  7. Transaction Hash: The unique blockchain identifier for verification purposes.
  • Specialized Cryptocurrency Tax Software: Applications such as CoinTracker, Koinly, or TokenTax facilitate transaction tracking and tax liability calculations.
  • Structured Spreadsheets: Custom-designed spreadsheets can effectively track Bond Token activities.
  • Bondi Finance Transaction History: Regular downloading and archiving of transaction records from the Bondi Finance platform is advisable.
  • Currency Conversion Resources: Reliable sources such as CoinGecko or established financial platforms should be used to document exchange rates at transaction times.

Jurisdiction-Specific Tax Guidance​

Tax regulations for digital assets vary considerably across jurisdictions. The following sections provide guidance for several major tax regions.

CountryCapital Gains TreatmentIncome TreatmentKey Reporting Deadlines
United Kingdom10-20% on gains above £6,00020-45% based on income bracketJanuary 31 following tax year
Canada50% of gains taxable at income ratesTaxed at marginal income rateApril 30 following tax year
SingaporeNo capital gains tax for individuals0-22% based on income bracketApril 15 following tax year
GermanyTax-free after 1 year; otherwise up to 45%Up to 45% plus surchargesJuly 31 following tax year
France30% flat tax (or progressive rates)30% flat tax (or progressive rates)May-June following tax year
AustraliaMarginal rates with 50% discount after 12 months0-45% based on income bracketOctober 31 following tax year

(Note: The information below is for general guidance and is based on 2025 tax regulations. Tax laws are subject to change. Always consult a local tax professional.)

United Kingdom​

  • Capital Gains Tax (CGT): Annual tax-free allowance of £6,000. Basic rate taxpayers pay 10% on gains above the allowance; higher rate taxpayers pay 20%.
  • Income Tax on Coupons: Taxed at 20-45% depending on your income bracket.
  • Reference: HMRC Cryptoassets Manual

Canada​

  • Capital Gains Tax: 50% of capital gains are taxable at your marginal income tax rate.
  • Income Tax on Coupons: Taxed at your marginal federal and provincial income rate.
  • Reference: CRA Guidance on Cryptocurrencies

Singapore​

  • Capital Gains Tax: No capital gains tax for individuals.
  • Income Tax on Coupons: Taxed at progressive resident tax rates from 0% to 22%.
  • Reference: IRAS Digital Payment Tokens

Germany​

  • Capital Gains Tax: Gains are tax-exempt if assets are held for more than one year. If held for less than a year, gains are taxed at your personal income tax rate (up to 45%).
  • Income Tax on Coupons: Taxed at your personal income tax rate up to 45% plus a solidarity surcharge.
  • Reference: German Federal Tax Office

France​

  • Capital Gains & Income Tax: A flat tax rate of 30% (including income tax and social contributions) typically applies to both capital gains and income.
  • Reference: French Tax Authority

Australia​

  • Capital Gains Tax: Gains are taxed at your marginal income tax rate, with a 50% discount available for assets held for more than 12 months.
  • Income Tax on Coupons: Taxed at progressive rates from 0% to 45%, plus a Medicare levy.
  • Reference: ATO Cryptocurrency Guidance

Professional Tax Advisory Services​

Given the complexity of digital asset taxation, professional guidance is strongly recommended. When selecting a tax professional, verify they have specific experience with cryptocurrency and are familiar with the tax laws in your jurisdiction.

Conclusion​

Understanding tax obligations is fundamental for compliant and successful participation in the Bondi Finance ecosystem. While Bondi Technology Inc. operates from Panama, individual tax obligations depend on investors' countries of residence.

The key takeaways from this guide include:

  1. Jurisdictional Variation: Tax treatment of Bond Tokens varies significantly across countries.
  2. Record-Keeping is Crucial: Comprehensive documentation of all transactions is essential for accurate tax reporting.
  3. Calculation Methodologies Matter: Understanding cost basis methods and holding periods can significantly impact tax obligations.
  4. Stay Informed: The digital asset taxation landscape is continuously evolving.
  5. Seek Professional Guidance: Consultation with qualified tax professionals is highly recommended.

Through maintenance of detailed records, understanding of tax implications, and appropriate professional guidance, investors can confidently navigate the tax landscape while benefiting from participation in the Bondi Finance platform.

Appendix A: Glossary of Key Terms​

  • Cost Basis: The original value of an asset for tax purposes, usually the purchase price plus acquisition fees.
  • Capital Gain/Loss: The difference between the cost basis of an asset and its sale price when disposed of.
  • FIFO (First-In-First-Out): An accounting method that assumes the first assets purchased are the first ones sold.
  • LIFO (Last-In-First-Out): An accounting method that assumes the most recently purchased assets are the first ones sold.
  • Specific Identification: A cost basis method that allows investors to identify which specific units of an asset are being sold.
  • Holding Period: The duration between the acquisition and disposition of an asset, often affecting tax rates.
  • DTA (Double Taxation Agreement): Treaties between countries to prevent the same income from being taxed twice.
  • Stablecoin: A type of cryptocurrency designed to have stable value, such as USDC which is pegged to the US Dollar.
  • Smart Contract: Self-executing contracts with the terms directly written into code, as used in the Bondi Finance Platform.
  • Tokenization: The process of converting rights to an asset, such as a bond, into a digital token on a blockchain.

Appendix B: Useful Tax Resources​

Global Resources​

Jurisdiction-Specific Resources​

Bondi Finance & Regulatory Resources​