A recent communication from CRA indicated that they have roughly 400 ongoing audits or examinations related to crypto-assets, including 125 “intent to audit” letters sent to taxpayers that they believe did not report income obtained through cryptocurrency trading on Coinsquare. In 2021, CRA required Coinsquare, via an unnamed persons requirement (UPR), to provide information on its 16,500 top users from 2014 to 2020. These letters provided the taxpayer with 45 days to voluntarily contact CRA to declare any missing crypto-related income, in which case CRA would waive any penalties and interest. CRA noted that failure to respond may lead to a full audit of the taxpayer.

While CRA only reassessed $54 million in undeclared income last fiscal year, a director general at CRA has noted that CRA’s activity is evolving rapidly and that CRA will adjust their compliance measures as the risk of non-compliance changes.

In addition, CRA commissioned a poll in 2023 that found one-third of respondents did not have a “firm grasp” of their tax responsibilities surrounding crypto-assets. On a knowledge test of the tax rules surrounding crypto-assets, cryptocurrency users tested just over 50%.

CRA has stated that they are considering issuing additional UPRs to other exchanges until the government implements the crypto-asset reporting framework proposed in Budget 2024. The proposals would require crypto-asset service providers to file an annual report that includes customer and transaction information with CRA commencing in 2026.

ACTION: Ensure that crypto-asset transactions are properly reported. Save and store records on an ongoing basis.