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CRA Pursues $54 million in Unpaid Crypto Taxes

Crypto | May 7, 2024

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CRA's Enforcement on Unpaid Crypto Taxes in Canada

The Canada Revenue Agency (CRA) has initiated about 400 audits and examinations targeting crypto asset non-compliance as it pursues approximately $54 million in unpaid taxes from cryptocurrency transactions. This reflects an increased enforcement environment as regulators catch up with technological advancements in finance.

See:  CRA Tax Implications for Individuals and Crypto Platforms

One of the issues is the lack of public awareness regarding crypto tax obligations. A recent survey commissioned by the CRA found that a third of respondents were unclear about their tax duties, with scores on regulatory knowledge averaging just over 50%.

Fintech companies must not only comply with a complex regulatory environment but they must be prepared to meet the CRA’s use of an Unnamed Persons Requirement (UPR) to collect transaction data from its customers.  In 2021, Coinsquare was required to provide information about any clients that either transacted or held at least $20,000 to the CRA and also anyone with total transactions and earnings from 2014 to 2020 of 16,500 of the most active users.  Crypto companies must maintain robust compliance programs.

Did you receive a letter?

Sahil Behal, a director general of CRA’s compliance branch explained that the letters issued to targeted taxpayers provide a 45-day window to report any undisclosed income from cryptocurrencies. If the taxpayers comply within this period, the CRA will forgive any associated penalties and interest. Failure to respond, however, could trigger a comprehensive audit by the agency.

See: 

Tax Tips for Canadian Crypto Users in 2024

The CRA is Going After Day Traders Who Use Their TFSAs

Outlook

The Canadian government plans to introduce the Crypto-Asset Reporting Framework by 2027, which will mandate crypto exchanges and service providers to report detailed annual transaction data. This impending regulation will significantly impact how crypto businesses operate and report.


NCFA Jan 2018 resize - CRA Pursues $54 million in Unpaid Crypto TaxesThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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