By Jarosław Adamowski
The Canada Revenue Agency (CRA) is increasingly targeting crypto traders who have not yet reported their profits from transactions as part of a large scale audit implemented by the tax agencys Cryptocurrency Section.
The crackdown was signaled by Norman MacDonald, head of tax litigation at the Toronto-based law firm Rogerson Law Group. To identify potential violators of the country‘s tax laws, the CRA recently secured a federal court order against Canada’s crypto exchange Coinsquare which required the platform to provide the names and details of all customer accounts, both active and inactive, to the agency.
The section‘s audit covers the period from January 1, 2013 to March 19, 2021. However, this “doesn’t mean that you don‘t have to report income for transactions prior to January 1, 2013. It just means that Coinsquare isn’t required to turn over any customer information prior to January 1, 2013. You still have to self-report. And since there is no time limit for the CRA to assess someone for failing to report, they can audit you at any time,” the litigator said.
According to MacDonald, the tax agency said it would use the obtained information to determine whether Coinsquare customers have filed required income tax returns, payroll remittances and GST/HST (goods and services tax / harmonized sales tax) returns.
Several years ago, the CRA performed a similar audit against online retail giant eBay, targeting the platforms high-revenue power sellers. The agency managed to secure a federal court order that obliged eBay to disclose its client records to the CRA, including data held on servers outside Canada, the litigator said.
“Since this is an ongoing project of the CRAs Cryptocurrency Section, I anticipate that the CRA will seek similar orders against other cryptocurrency exchanges in the future,” MacDonald said.
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