Canada Revenue Agency has won a landmark court decision in crypto trading.

Canada Revenue Agency has won a landmark court decision in crypto trading.

• Investing in Cryptocurrencies
• March 26, 2021

Canada Revenue Agency has won a landmark court decision in crypto trading. The court decision will allow CRA access to a treasure trove of customer data. CRA will not be limited to any one crypto trading desk as this decision forms a new precedent in the Digital and Crypto trading industry.

This landmark court decision that was announced on March 19, now allows CRA access to all trading platforms and customer data. All platforms now can be accessed by CRA upon request. What does this mean to the Canadian Taxpayer? All digital and crypto trades, whether gain or loss should be reported on the tax return in the year in which the gain or loss was realized. If a Canadian taxpayer has accidentally left these gains or losses out of any tax return, I highly recommend that you REFILE with professional assistance any affected year before CRA finds a discrepancy and proceeds corrective enforcement action. We highly recommend that the tax professional you engage be block chain/digital currency certified, as the taxation of digital/crypto gains/losses are not taxed in a straight forward manner. However, the means by how the investment was created may determine the taxation protocol to be applied. As laid out in CRA’s latest interpretation of digital earnings.

Coinsquare has been asked to release the data requested by CRA in reference to Canadian taxpayers. Currently, Coinsquare has been requested to release the information on 5-10% of its Canadian customers to CRA and as a result any Canadian high-value accounts will be identified for enforcement by CRA.

The court granted CRA’s request in only 7 months during a Covid Pandemic. This is lightning speed for this type of court decision, leading us to believe the courts will not tolerate non-disclosure of these types of earnings.

In court, CRA argued to release the data to see if taxpayers were exercising their crypto reporting duties, to which federal court agreed. Now things are getting clearer from CRA perspective that they are not stopping here and a further request for customer data by “Unnamed Persons Requirement (UPR)” is going to be pushing Coinsquare. According to spokesperson for CRA, agency is required to have the data to verify if the compliance to Canada’s Income Tax Act (ITA) and Excise Tax Act (ETA) is followed.

Few years ago, US Tax agency made the same efforts against Coinbase and were handed over the records of 13,000 customers.

 “Coinsquare negotiated to protect its clients’ privacy, and limit any disclosure to only what was absolutely required by the CRA under Canadian tax law,” Coinsquare told CoinDesk. 

“Instead of providing the CRA with all client data dating back to 2013 as was initially requested, Coinsquare and the CRA have agreed that information relating to 90%-95% of Coinsquare’s clients will not be disclosed.”

CRA spokesperson also said that the agency “reserves the right” to ask for future taxpayer data from Coinsquare and “other sources”, however the data disclosed “appears sufficient to verify compliance with the ITA and/or the ETA.”

For more information about our tax services, feel free to reach out to our experts at Watterson Financial Solutions Inc To connect with us, you can either call us at 647-638-2755 or email us at robert@wattersonfinancial.com. We are a team of dedicated accounting and finance professionals, and we cater to the needs of individuals and business owners. We specialize in all areas of tax, accounting, assurance, succession planning, risk management, and business consulting. That way, we can give you full control over your finances. We also provide business advice to companies in different industries so you can become tax-efficient and transition your business into the new economy.

For more information about our services, please click here or get in touch with us by clicking here. 

Valuable blog posts: Our blog is updated regularly with accounting advice, valuable tools, product/service information, and accounting trends.

Unmissable promotions: From time to time, we’ll share our most exclusive promotions with our newsletter subscribers. Don’t miss out!

We promise we won’t overload your inbox! Watterson Financial Solutions Inc’ email newsletter is sent out bi-monthly with only the most relevant content for you.

With several years of experience, Watterson Financial Solutions Inc is a leading accounting firm in Mississauga, Ontario. Our services include personal tax planning, business registration, business setup and consulting, bookkeeping and accounting, payroll, WSIB, HST, corporate tax, assurance, disability tax credit program, budgeting and forecasting services, insurance, mortgages, investments, real estate and legal services, business valuation services, estate planning services, litigation support and damage quantification services.

To learn more about what we do, please click here, or get in touch with us by clicking here.

Sign up for our newsletter now to stay in touch with us. Register here! 

Personal Tax Planning | Business Registration | Business Setup & Consulting | Bookkeeping & Accounting | Payroll, WSIB, HST | Corporate Tax | Assurance | Disability Tax Credit Program | Budgeting and Forecasting Services | Insurance, Mortgages, Investments, Real Estate & Legal Services | Business Valuation Services | Estate Planning Services | Litigation Support and Damage Quantification Services | Staunch IT Consultants |