Government Crackdown on Cryptocurrency Transactions in Canada: CRA to Receive More Information

The federal government in Canada is taking steps to crack down on potential tax cheats by introducing new measures to track cryptocurrency transactions. The Canada Revenue Agency (CRA) will be given more power to penalize taxpayers who refuse to disclose information it wants.

In the budget tabled on Tuesday, Finance Minister Chrystia Freeland announced that starting in 2026, Canada will implement the Crypto-Asset Reporting Framework developed by the Organisation for Economic Co-operation and Development. This framework will require crypto-asset service providers in Canada to begin annual reporting to the CRA.

Under the new provisions, crypto-asset service providers will have to disclose information on each customer and each crypto-asset transaction, including exchanges between crypto-assets and government-issued currencies, exchanges for other crypto-assets, and transfers of crypto-assets for purchases exceeding $50,000 US.

Additionally, the budget includes $51.6 million allocated to the CRA over five years to implement and administer the new reporting system. The government is also seeking feedback on whether crypto-backed assets are suitable as qualified investments for registered savings plans.

The budget also addresses the issue of tax planners who help clients engage in tax evasion and aggressive tax avoidance. Clients of these tax planners will now be held liable for all tax debt avoided, including any portion retained by the tax planner.

Furthermore, the CRA will receive more insight into donations to foreign charities registered in Canada. The time period for foreign charities to qualify for Canadian donations will be extended to three years, and they will be required to submit an annual return detailing the total amount of receipts issued to Canadian donors and how the funds were used.

Overall, these new measures aim to strengthen anti-avoidance laws and ensure a fair tax system in Canada. Critics welcome the government’s efforts to update tax information rules to include cryptocurrency transactions and hope that these changes will empower the CRA to go after tax cheats and win.