Taxation of Cryptocurrencies in Canada: What Business Leaders Need To Know
Cryptocurrencies, such as Bitcoin, are not viewed by many governments, including Canada, as actual currencies but as commodities. This means that transactions are viewed as “barter” and thus creates a taxable event. The IRS in America has won a landmark case against an agency that deals in investments of these currencies, forcing many of these investors to pay tax. In Canada, the CRA has the ability to hold any similar company or investor responsible for tax payments as well. As more of this type of investing occurs, you can be sure that the government will keep up and get it’s share of taxes.
- Cryptocurrency’s status as a currency is uncertain and the CRA says they should be viewed as a commodity instead.
- Increasing investigations of it’s users has lead to removal of anonymity for regulatory and tax tracking purposes. Additionally, America is an example of what the CRA can follow in terms of regulation and taxation.
- Scrutiny of cryptocurrency from all types of regulators, including tax authorities, will likely lead to structure, transparency and legitimacy, as well as tax implications.
“Accepting Bitcoin as payment does not exempt merchants from recognizing income on a sale. Similarly, those who swap crypto for merchandise would need to report income or a capital gain (or loss) on the disposition of their crypto asset.”