CRA Warns Digital Currency Does Not Exempt Canadians from Their Tax Obligations
The Canada Revenue Agency (CRA) is targeting users of Bitcoin (BTC) and other crypto assets in its latest series of audits — starting with a 13-page questionnaire.
Time for Bitcoin Users in Canada to Pay Their Taxes
According to an article in Forbes yesterday, Bitcoin researcher and writer Kyle Torpey revealed that the CRA is cracking down on Bitcoin (BTC) and other crypto-asset users in Canada. Torpey says that multiple sources have confirmed the crackdown from the Canadian equivalent of the US Internal Revenue Service (IRS). Those users currently in the eye of the CRA have received a 13-page questionnaire with no less than 54 questions and sub-questions.
A media representative at the CRA commented on the clampdown, stating:
The Canada Revenue Agency (CRA) understands that a vast majority of middle-class Canadians pay their fair share, but it remains committed to ensuring that without exception, every taxpayer abides by the same tax laws.
The contact also assured that the CRA was keeping pace with developments in the cryptocurrency industry. In fact, the Canadian tax authority actually established a dedicated cryptocurrency unit in 2017 to build intelligence and conduct audits. It also reinforced that anyone thinking of using bitcoin as a way of evading taxes had better think again:
The CRA is also committed to helping taxpayers understand their tax obligations when using digital currencies, and to remind them that using digital currency does not exempt consumers from their tax obligations.
Bitcoin users in Canada are being targeted with audits by the Canada Revenue Agency (federal tax agency). Attached are some images of the questionnaire being sent out to individuals in relation to the audits.
Following a Similar Path to the IRS
Bitcoin users in the United States are already familiar with the risks of being a target of the tax authorities. In Feb 2018, the IRS (Internal Revenue Service) forced the Coinbase exchange to hand over information about its users. Coinbase fought the order in court. However, the company still had to hand over data on 13,000 of its customers to the IRS.
In Canada, there are currently more than 60 active cryptocurrency audits right now. However, the contact could not confirm who was being targeted.
The Audit Process Includes a Lengthy Questionnaire
The audit from the CRA will come as a headache to many bitcoin users north of the border. Canadian authorities have been somewhat more lenient on Bitcoin regulation until now. As part of the auditing process, digital asset users will have to answer 54 questions and sub-questions about their movements in the cryptocurrency space in recent years.
Part of the clampdown is to flush out money laundering. One of the questions pertains to the use of tumblers and mixing services. These are notably used to protect user privacy and, well, obfuscate the origins of cryptocurrency funds.
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