CRA Continues Auditing Cryptocurrency Users
New Questionnaire Focuses on Unreported Income
Over 50 Questions to Determine Taxpayer Knowledge
The Canada Revenue Agency (CRA) is continuing its crackdown on cryptocurrency users with a new questionnaire that will be used to audit taxpayers for unreported income from crypto-asset activities.
The questionnaire, which includes over 50 questions, will be sent to taxpayers who are selected for a CRA cryptocurrency tax audit.
The questionnaire is designed to gather information about the taxpayer's knowledge of cryptocurrency taxation, their crypto-asset transactions, and their sources of income.
The CRA is also asking taxpayers to provide information about their cryptocurrency exchanges, including the names of the exchanges, the dates of their transactions, and the amounts of their transactions.
If a taxpayer is unable to provide the requested information, the CRA may make an assessment based on the information that is available. This could result in the taxpayer being assessed for additional taxes and penalties.
The CRA's increased focus on cryptocurrency taxation reflects the growing use of crypto-assets in Canada. In 2021, the CRA estimated that there were over 300,000 Canadians who owned or traded cryptocurrency.
The CRA has warned taxpayers that they are required to report all of their income from crypto-asset activities, including income from trading, mining, and staking.
Taxpayers who fail to report all of their income from crypto-asset activities may be subject to significant penalties.
Conclusion
The CRA's cryptocurrency tax-audit questionnaire is a reminder that the CRA is serious about enforcing the tax laws related to crypto-asset activities. Taxpayers who are selected for a cryptocurrency tax audit should take the questionnaire seriously and provide the CRA with all of the requested information.
Failure to do so could result in the taxpayer being assessed for additional taxes and penalties.
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