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The rapid development of virtual worlds has made virtual currency and virtual property big business.
Virtual currency from almost every game and social virtual world can be exchanged for real world currency.
It is this type of exchanges from virtual currency to real world currency, generally at a profit, that caught the attention of tax authorities.The study concluded that where income from virtual worlds form part of a resident’s gross income, the expenditure incurred in generating this income, by means of a trading activity, qualify for a deduction in terms of the general deduction formula, contained in section 11(a) of the Income Tax Act of South Africa.
Benjamin Franklin once said that in this world nothing is certain but death and taxes.
This seems to be even truer today, as revenue authorities across the world investigate ways in which to tax income earned from virtual worlds.
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