Many Canadians may have recently received a questionnaire/audit regarding their cryptocurrency holdings and habits. These were sent to an undetermined number of Canadians, as the Canada Revenue Agency (CRA) continues to show an increasing interest in the industry. Read on to learn more about this event, and what it means for investors.
As of now, the CRA has not released any details outlining their selection process for who is being audited. In addition, the number of Canadians affected is also unknown. This, however, is no doubt just the first round of many audits that will occur in the future.
These audits are the result of a dedicated branch of the CRA that was formed in 2017 to monitor the cryptocurrency industry.
Unwilling to Comply
There is a possibility that the CRA may eventually feel as those its time would be better spent elsewhere. The CRA’s counterpart to the south, the IRS, drew the ire of many investors last year, as they decided to approach the popular trading platform Coinbase. While Coinbase fought the inquiry, they were eventually forced to reveal client information to the IRS. While it is unlikely at this time, this is a route that the CRA could take in the future, if individuals are unwilling to comply.
With an increasing mainstream presence, it should come as no surprise that the CRA is showing an increased interest in cryptocurrencies. In an ongoing situation, thousands of Canadians have been burned by QuadrigaCX – Canada’s most prominent crypto exchange, up until their astounding demise.
With situations like these occurring, and the well-known tales of Bitcoin millionaires being made in years past, the CRA would be foolish to not gain a better understanding of the industry, and those that participate in it.
You Can Run, but You Can’t Hide
One of the draws toward Bitcoin and similar cryptocurrencies is its transparency. Contrary to popular belief, Bitcoin is not anonymous. The immutability afforded through the use of blockchain means that every transaction is recorded forever, for the entire world to see.
With this in mind, it is vital to remember that although traders may be able to run for a period of time from their tax responsibilities, they will not be able to hide forever. A significant amount of future headache will be avoided by simply getting on top of the situation now, before the CRA decides to audit even more.
While no one wants to be audited, this situation may light a fire under many investors that have failed to report their trading activities. It is important to remember that reporting this activity has the potential to work in favour of many. Looking back, it was a dismal year that no doubt resulted in drastic losses for many involved within the industry. These losses could prove to be a boon for those that have not reported them.
The Canada Revenue Agency, or CRA, is the government body that is tasked with governing financial responsibilities pertaining to taxes within the nation. The organization began taxing Bitcoin and similar cryptocurrencies in 2013.
The bottom line is, the CRA is not going to turn a blind eye to the industry. For anyone that has invested in cryptocurrencies, make sure to use an actual accountant with experience dealing in these types of assets. In the meantime, start learning about crypto tax obligations HERE.