Canada’s tax agency, the Revenue Agency (CRA), is cracking down on uncollected taxes related to cryptocurrencies, targeting an estimated $40 million in undeclared taxes. This comes as Prime Minister Justin Trudeau seeks to increase capital gains taxes from 50% to 66% for individuals whose gains exceed $183,000 annually.
The CRA has initiated around 400 audits and investigations into undisclosed crypto transactions and profits, aiming to collect CAD 54 million ($39.5 million). However, the agency faces challenges in educating the public about their tax responsibilities regarding digital currencies. The CRA has been criticized for lacking guidance on reporting crypto taxes, leaving taxpayers unsure about how to comply with the law.
The agency is closely following the lead of the US Internal Revenue Service (IRS), which has recently issued a draft of tax Form 1099-DA to track proceeds from brokered crypto transactions. The CRA, however, has yet to provide similar guidance.
Meanwhile, Prime Minister Trudeau and his party are looking to raise capital gains taxes across the board. While the main focus is on corporations and high-net-worth individuals, anyone with annual gains of CAD 250,000 ($183,000) will be affected. This proposed increase from 50% to 66% has sparked concerns among Canadians, with 45% fearing negative impacts on the economy and innovation.
As Canada and the US both consider higher capital gains taxes, the global cryptocurrency community will be closely watching these developments and assessing their impact on the industry.