"A currency is a unit of exchange, facilitating the transfer of goods and services." - Wikipedia.

"'Fictional Currency' is used as game tokens and have no monetary value in and of themselves and as a result are not be taxable as income. In most cases a fictional currency constitutes a limited license right for use by account holders and is subject to the terms of each Fictional Currency provider. The World Stock Exchange supports the "Linden Currency" (Linden Dollar, LND$, L$, Lindens) and the "World Internet Currency" (WIC, WICS, W$)." - LukeConnell Vandeverre, Chairman and CEO, World Stock Exchange.

Vandeverre is right ... and wrong when he says "have no monetary value". You see, as long as he sticks to first party tokens (W$, in this case) he's right. We're just talking game tokens. However, any interaction with Linden Dollars (L$) or other currencies messes up the statement.

In an unprecedented move, the Australian Tax Office has declared that virtual transactions are taxable. While the US and UK are still considering the issue, if you live in Australia, you'll need to start keeping account of your earnings in SL.

One wonders exactly how the ATO will keep track of resident earnings; will they open shop in SL? Will they be working with LL to figure out ways to enforce compliance? Regulation of affairs taking place over the Internet is a complicated affar, given that users manipulate avatars that frequently reside on servers in countries other than their own. Can events still be said to be taking place in the taxable location? Chime in with your thoughts, especially any Australians who read this blog!

(Via The Age)

We can all breathe a sigh of relief. Representative Jim Saxton, chairman of the Joint Economic Committee said, regarding the recent news that congress was looking into tax issues concerning virtual worlds, "The goal of the forthcoming JEC study is to help lawmakers understand the issues involved and head off any premature attempt to impose a tax on virtual economies."

Boldly said. Apparently this is just a fact-finding mission, nothing to worry about. Further, this study is expected to conclude by the end of the year, so I'm eager to see what they manage to find.