Canadian Tax Agency Reportedly Auditing Crypto Investors

The Canada Revenue Agency (CRA) is auditing cryptocurrency investors in the country, according to a March 6 Forbes report.

According to Forbes, the tax-collecting agency is sending questionnaires to the Canadian taxpayers asking their involvement in the digital asset investment in recent years. The crypto-related section in the questionnaire is 13 pages long and has 54 questions.

“In order to make good on these commitments, the CRA established a dedicated cryptocurrency unit in 2017 to build intelligence, and conduct audits focused on risks related to Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term,” the CRA told Forbes. “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 publication detailed that the tax agency is seeking answers regarding the source of the digital asset investments and whether the investors are using “cryptocurrency mixing services and tumblers.”

The agency is also enquiring if the investors are using services like ShapeShift or Changelly to buy or sell cryptocurrencies as trades on these platforms can be conducted without revealing any identity.

The Canadian tax agency is taxing crypto-related income since 2013. It already monitors trading activities on the registered exchanges.

“The CRA’s enhanced efforts in this space stem directly from its broader Underground Economy Strategy, which includes a commitment to monitor emerging platforms and new business models, with a special focus on the sharing economy and digital currencies,” the agency added.

Approaching Tax Filing Deadline

The push by the agency to disclose all crypto-related incomes came with the approach of the deadline of filing tax returns by the Canadian taxpayers. Salaried Canadians must file tax returns before April 30 whereas the deadline for self-employed taxpayers is June 15.

“The CRA is also committed to helping taxpayers understand their tax Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term 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,” the CRA concluded.

Relief for US Taxpayers

Meanwhile, in the United States, crypto businesses are integrating technologies to ease the process of declaring crypto incomes while filing tax returns. Coinbase, in January, integrated TurboTax, the tax-filing software by Intuit Consumer Tax Group, in its platform to allow its professional and retail customers to directly upload their transactions, gains, and losses for tax filing.

The audit firm Ernst & Young also jumped into the sector with the recent launch of a tool to facilitate accounting and tax calculations for cryptocurrency transactions for both institutional and retail investors.