Canada Revenue Agency (CRA) issues tax laws to the Government of Canada as well as for the majority of regions and territories. Different types of social and economic benefits and incentive programs that are offered by the tax system are also issued by CRA. Recently apart from these services CRA has started to audit the digital currency investors.
At the beginning of this year, it was tweeted by Jared Adams, Project Oversight Director of CRA, that there is a possibility that the bitcoin is being used for money laundering. He tweeted this as a response to the suggestions made to their clients who were from a bitcoin-related firm.
It has been confirmed by various sourced that the Federal tax agency of Canada is targeting users of digital assets and bitcoin in Canada with audits. CRA has sent an extensive question sheet to the cryptocurrency investors with a viewpoint of knowing the activities that are being done by them on the cryptocurrency space in the last couple of years. There are about 54 questions which consist of sub-questions, and it is a 14 pages questionnaire.
There were scammers who would call an unaware citizen of Canada to demand questionable tax payments in the form of bitcoin in the past and CRP had to deal with this issue. In the past, the United States digital bitcoin users were also targeted by the Internal Revenue Services who demanded Coinbase to give up a huge amount of personal information about their users. But this was denied by Coinbase by finally fighting the case in the court and was able to restrict the collection of user info by the IRS.
The main motive of the above-mentioned questionnaires is that CRA wants a clarification about several essential facts regarding cryptocurrency investors’ digital currency investments. Some of the questions among many are how the investors purchased the crypto assets, through which medium did they make the purchase, and whether services such as combining of crypto coins were done. There are even questions which ask whether the cryptocurrencies have been sold/bought on the exchanges such as Changelly or ShapeShift. These are the exchanges that let the investors purchase or sell the digital currencies without revealing the personal info of the user.
A statement was made by CRA when asked why they were targeting crypto investors saying that they understand that a lot of middle-class Canada citizen do make the payments appropriately. However, it is important to make sure that every Canadian abides by the tax laws and that there should not be any exceptions.