CRA goes after client details of major Canadian cryptocurrency marketplace in battle against ‘underground economy’

National Post | Christopher Nardi | Nov 6, 2020

canadian 300x247 - CRA goes after client details of major Canadian cryptocurrency marketplace in battle against 'underground economy'The Canada Revenue Agency wants to know the identity of every client of a major Canadian cryptocurrency trading platform as part of its effort to fight tax fraud and the underground economy.

In a September filing to the federal court, Canada’s tax agency is asking a judge to force Toronto-based crypto trading platform Coinsquare to hand over information and certain documents about all its clients since the beginning of 2013.

In its filing — the first of its kind involving a Canadian cryptocurrency exchange — the CRA says it needs all the information to ensure that Coinsquare’s customers have “complied with their duties and obligations” under Canadian tax laws.

See: CEX.IO’s Executive Director Predicts the Future of Crypto Exchanges

In other words, CRA wants to make sure that the firm’s clients have declared all their income, paid their fair share of taxes and haven’t used cryptocurrencies to hide assets.

The details contained in the few documents available from the federal court are scarce, but all this likely means that CRA wants to know which Canadians have been trading on Coinsquare’s platform, and then compare it to their past tax filings.

If a Canadian trader on Coinsquare has not declared any cryptocurrency revenue or trading to CRA, then the agency may decide to further audit that person or organization, said David Piccolo, a tax lawyer at Tax Chambers.

“CRA could use this information to essentially try to verify or to match certain transactions with what was reported” in Canadians’ tax filings, Piccolo said in an interview.

Because the case is in front of the federal court, CRA spokesperson Charles Drouin refused to comment on the Coinsquare request specifically.

See: Expert Tips and Strategies for Crypto Trading

The agency also refused to say if the decision to seek Coinsquare’s client list has anything to do with significant penalties imposed by the Ontario Securities Commission on the company and several of its executives earlier this year. The provincial regulator imposed $2.2 million in sanctions and costs against the firm for having significantly faked its trading volume, then tried to cover it up all the while firing a whistleblower that flagged the issue internally.

But as a general comment, Drouin says the CRA considers that there is a “high” risk of tax fraud, evasion or any other type of tax crime within cryptocurrency trading.

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