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Tax

New tax reporting rules for crypto-assets

Canada will adopt OECD's crypto-asset reporting framework by 2027, increasing tax transparency and reporting requirements for service providers

Canada recently committed to adopting the OECD’s new global standard for exchanging information between tax authorities about transactions in crypto-assets. The 2024 federal budget confirmed the government’s intent to adopt these measures in Canada in 2026, with exchange of information in 2027. As these new rules are introduced, taxpayers and their advisers will need guidance from the CRA on the proper tax treatment of crypto-asset transactions. 

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Crypto assets include cryptocurrencies, such as bitcoin and cryptography-based tokens that may represent other assets besides currency. As crypto-asset markets are evolving rapidly, tax authorities have become increasingly concerned about their potential for tax evasion. Crypto assets can be issued, transferred, and held without interacting with traditional financial intermediaries, who are typical information providers to tax authorities. As a result, it’s difficult for tax authorities to keep track of taxable transactions involving these assets. 

The crypto-asset market has given rise to new intermediaries and other service providers, such as crypto-asset exchanges and “wallet” providers. Crypto-asset exchanges typically facilitate the purchase, sale and exchange of crypto-assets for other crypto-assets or government-issued currencies. Wallet providers offer digital wallets that individuals can use to store their crypto assets, either online or downloaded. 

The new intermediaries and other service providers only recently became subject to financial regulation and are often not yet subject to tax reporting requirements about their users. Particularly, the ability of individuals to hold assets in wallets unaffiliated with any service provider and transfer assets across jurisdictions presents the risk that crypto assets may be used for illegal activities or to evade tax obligations. 

As a result, tax authorities are seeking to increase global transparency for crypto-assets to reduce the risk that their holders are not complying with their tax obligations. The OECD has developed the Crypto-Asset Reporting Framework (CARF), which is designed to ensure the collection and automatic exchange of information on transactions in crypto-assets.  

The CARF includes rules and related commentary that can be adopted into countries’ domestic law to collect information from crypto-asset service providers, a multilateral competent authority agreement on automatic exchange of information under the CARF or bilateral agreements such as tax treaties, and an electronic format to be used for exchanging CARF information. 

Canada, the U.S., the U.K. and more than 40 other countries have announced their intention to implement the OECD’s new reporting framework by 2027. The 2024 federal budget includes a proposal to implement the CARF in Canada but does not include an intended date for the measures to take effect. 

These measures will impose a new annual reporting requirement on entities and individuals, referred to as “crypto-asset service providers”, that provide business services to facilitate crypto-asset transactions. These service providers that are resident in Canada or carry on business in Canada would be required to report to the CRA for each customer and each crypto-asset: the annual value of exchanges between crypto-assets and government-issued currencies, exchanges for other crypto-assets and transfers of crypto-assets.  

Crypto-asset service providers would also be required to report information on each of their Canadian resident and non-resident customers, including name, address, date of birth, jurisdictions of residence and taxpayer identification numbers for each of these jurisdictions. The same information would be required for individuals who control corporations/legal entities that are customers of these crypto-asset services. 

CPA Canada is committed to helping CPAs and taxpayers navigate these new rules. At the CRA’s request, CPA Canada has established a crypto-currency working group made up of crypto-asset experts across the country to discuss areas where taxpayers will need CRA guidance for both income tax and GST/HST. The group’s recent submission identifies issues the group’s members experience in practice and also asks the CRA to centralize its crypto-currency guidance in one location to make it easier to find. 

CPA Canada will continue to work with the CRA to help ensure taxpayers and their advisers receive the guidance they need in preparation for CARF implementation.