Canada Auditing Cryptocurrency Investors

According to a recent report, the tax collection service of Canada, CRA i.e. the Canada Revenue Agency has started auditing the cryptocurrencies’ investors.

The report states that the tax collection agency has sent extensive questionnaires to the crypto investors in perspective of the activities done by them in crypto space for the last few years. This extensive questionnaires has around 54 questions as well as sub-questions and is of 14 pages.

When asked about the criteria of selecting the files for this audit, the officials of the Canada Revenue Agency declined to answer by saying that they couldn’t disclose the criteria as this might violate the integrity of their risk assessment systems.

The questionnaires aim to clarify many important facts about the crypto investments of crypto investors. It has several questions like how they bought the digital assets, what was the medium of this purchase, do they use services/tumbers like mixing of the digital coins etc. It also includes queries like have they purchased/sold the cryptocurrencies on the exchanges like  ShapeShift or Changelly. It must be noted that the two mentioned crypto exchanges allow the investors to buy/sell the cryptocurrencies with no disclosure of the identity of the customer.

Canada Revenue Agency started imposing taxes on the cryptocurrencies six years ago in 2013. It further established a unit for cryptocurrency taxation in 2017. The main idea behind the establishment of this separate unit was to collect intelligence and conduct audits related to crypto market risks. This organization closely monitors crypto related activities in the country. As per some sources, the organization view the digital currencies as a commodity, hence it is liable to be taxable as other business income or capital profits,

Canada Revenue Agency directs all the crypto investors of the country to file their tax returns before April 30. For self-employed can file it till June 15. There has been a lot of software which allows the crypto investors to calculate the taxes on their crypto assets. TurboTax is one of the popular such software. It allows the user to calculate tax from their assets from exchanges like  Coinbase, Gemini, and Poloniex. Recently, Ernst & Young launched a similar tool named, EY Crypto-Asset Accounting and Tax for calculating taxes of crypto investors.