Canada is launching crypto audits: here’s what to expect
The Canada Revenue Authority is now auditing users of bitcoin and other crypto assets, as per Forbes.
The CRA has sent a questionnaire in order to understand crypto trading activity. Many crypto exchanges are enacting KYC (Know Your Customer) policies, which means they store your government ID and trading history. From this, exchanges can track and report your trading history.
Recipients of the audit had to answer a 54-part questionnaire. Here are some example questions:
When did you start getting involved in the cryptocurrency space and how did you get involved?
Do you use Shapeshift exchange or Changelly? If so, please provide us with the cryptocurrency addresses you’ve used to trade with, along with the dates you made these particular “swap” trades.
Who filed the tax returns for the period under audit? Also, what documentation was given to the tax preparer with regards to your cryptocurrency investments, in order for them to calculate the right capital gain(s) and/or income?
Can you tell us about all the cryptocurrencies that you own? Provide us with a timeline of when you made each purchase from fiat to crypto. Check out the rest of the questionnaire here.
When asked about the increased audits, the CRA released this statement:
“This unit has enhanced the CRA’s ability to monitor and enforce compliance in areas of emerging risk, including the cryptocurrency space. There are currently over 60 active audits related to cryptocurrency. The CRA is also committed to helping taxpayers understand their tax obligations when using digital currencies, and to remind them that using digital currency does not exempt consumers from their tax obligations. The CRA has published educational material on its website regarding the tax treatment of dealing in Digital Currency.”
If you are a Canadian crypto trader, we would love to help support you through preparing for a potential audit, just chat with us using the chat interface on our website.
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