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Tax Time! (Australia): Income from Second Life et al


Anyone watch the Second Life thingie on 60 minutes last night? You any the wiser? I missed it – did they mention that only 3000 Australians have signed up? Globally there are 7 million avatars – but only 1 and 1/2 million have logged in the last 60 days and I never see more than 40,000 online at a time. How many of the Australian 3000 are in that 40,000? You do the math. (I get 15. And they aren’t all sitting around ABC or BigPuddle). Another Australian TV program beat-up I gather? This Four Corners one was quite good.

But it’s TAAAAX TIIIIIME! So get out your calculators:

Australia says virtual income taxable – report

Wed Nov 1, 2006 10:11am PST

By Adam Reuters

SECOND LIFE, Nov 1 (Reuters) – The Australian government has determined that income earned in virtual economies like Second Life and World of Warcraft should be taxed, as authorities in the United States and Britain study the issue, according to a report in the Sydney Morning Herald.
“The real world value of a transaction may form part of your taxable income, even if it is in Linden dollars,” a spokeswoman for the Australian Tax Office told the paper. “If you are getting a monetary benefit then it’s not treated any differently – normal rules apply.”

In Britain and the United States, income earned in a virtual currency such as Linden dollars is only taxable after it is converted into a real-life currency. A U.S. Congressional committee is investigating whether new laws need to be created to deal with the rapid growth of worlds like Second Life, although the committee’s chairman has said he is opposed to any “premature attempt to impose a tax on virtual economies.”

Britain’s tax authority are taking a “wait and see” stance on the issue.

Want to discuss or comment? Click here to teleport to the Reuters Second Life discussion area, or meet Adam Reuters during his office hours at Reuters Island on Mondays, Wednesdays and Fridays starting at 11:00am PST.

What would the paparazzi look like in Second Life? Avatars with dingy overcoats? Anyway, this sounds a bit off-the-cuff from Tax Department. Second Life is one of the few virtual worlds with an accepted stock exchange (run by a Melbourne chappie, I believe). If you trade World of Warcraft gold for Australian dollars, you are contravening their Terms of Service. I guess that makes the Australian Government complicit? An accessory? How about receiving stolen goods and earning? 😛 Been reading Julian Dibbell’s Play Money. Truly awesome (he put ina tax return to state his earings to the US IRS, very funny). I think the Tax Department is just hearing a one of those sound effects in Second Life. KA-CHING.

Talking of KA-CHING (hat tip to Lisa H. in NZ):

Foundation With Real Money Ventures Into Virtual World

Published: June 22, 2007

For the first time, one of the nation’s largest foundations is venturing into virtual worlds to play host to activities and discussions and explore the role that philanthropy might play there.

The foundation, the John D. and Catherine T. MacArthur Foundation, is sponsoring events in Second Life, the online world.

The goals are to gain insight into how virtual worlds are used by young people, to introduce the foundation to an audience that may have little exposure to institutional philanthropy and to take part in and stimulate discussions about the real-world issues that it seeks to address. (more)

Problem is, our current money as a store of value is useless with what we truly value online (we use ratings mostly). Because we don’t acknowledge what we truly value online, and don’t monetise it, money is irrelevant as a unit of account (e.g. the WoW example above). Plus, how much does 5 pixels weigh? Heh. It’s klutzy as a medium of exchange (paypal vs the ease of chucking down 1 buck for a newspaper). Lets not even contemplate a standard of value where social media, social networks and virtual worlds are concerned. Here today, gone today would be a fair call. Am I wrong? I think we have little liquidity online but your mileage may vary. Currency ain’t got no currency.*sings* “Money is a matter of functions four, a medium, a measure, a standard, a store. “

koi beach sale on facebook

But ever the contrary gal, I’m thinking of buying an island in Second Life. What do you think? shall we go dibs together and share one? David N Wallace has got one($180 USD), we could beat him up, do some standover tactics, force him give us a share of his island. Horses head in the bed and all that good stuff. But only in Second Life, we couldn’t possibly do anything illegal in Real Life. 😛 Threaten to report him to the ATO and IRS cos he’s probably making like 4 dollars profit? *hugs David* Nah, lemme charm him into a good price. teeeheee. Soooo, should we have our own tribe, island, social network in Second Life? What would we be called? I’m SilkCharm Sachertorte in-world btw, sweetness personified. Signing off…

Laurel Papworth

Named by Forbes™ Magazine in the Top 50 Social Media Influencers globally, named Head of Industry, Social Media (Marketing Magazine™) and in the Power150 Media bloggers (AdAge™). CERT IV Training and Assessment certified trainer (Diplomas and Certificates etc) Adult Education. Laurel has manager Facebook Pages for Junior Masterchef, Idol, Big Brother etc. and have consulted on private online communities for banks Westpac, not for profits UNHCR & governments in SE Asia. Lecturer, social media, University of Sydney for 10 years and Laurel has 11,000 online students. Laurel Papworth personally connects to 6 million followers online and has taught around 100,000 people in the last 10 years how to be social media managers.

3 thoughts on “Tax Time! (Australia): Income from Second Life et al

  1. I always enjoy the things that your write about.

    My wife works for the ATO and we laughed about your story.

    I recently ventured into SL as part of preparations for the awards ceremony for the Blogpower Cooperative that I am a member off. We just did an online blog competition using poll code quizes. A bit of brute force and crude, but we got there. Our members are from all around the world and SL was an innovative way to have the ceremony. One of the bloggers is a property lawyer in real life and a property developer in SL. He has set up the ceremony on the largest Airship in SL, which I accompanied him to purchase. All good fun and another interesting way to interact with other bloggers. We are all new and it is interesting to see more of the personality of the bloggers come out as we interact during practice sessions.

    I think one of the issues with SL in Australia is the poor broadband speeds in many communities. You also need a pretty woop de doo computer to run it effectively.

    So if we meet in second life, does that mean we can exchange virtual blog links. I am Jocko Cioc. I will look out for you on ABC island.

  2. ooohhhh an airshiiiiip

    I have to upgrade my SL then I’ll start adding ppl to friends list. 🙂

    BTW SL now has a linkety link into Joomla online communities. Something to think about, I guess. Nice to see your SL messages coming onto a webpage along with club updates and so on.

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