Canada Implements Stricter Crypto Reporting Measures

Canada Crypto Measures
Canada is stepping up its oversight of cryptocurrency-related businesses with stricter reporting requirements outlined in the 2024 federal budget.

Announced on April 16, the budget introduces the Crypto-Asset Reporting Framework (CARF), endorsed by the Organisation for Economic Co-operation and Development (OECD) in August 2022.

This move is a response to a 2021 mandate from the G20, which tasked the OECD with creating a framework for the automatic exchange of tax information involving crypto assets.

Under these new laws, providers offering crypto-related services such as exchanges, brokers, dealers, and ATM operators must adhere to enhanced reporting standards, annually disclosing comprehensive transaction details to the government.

The reporting criteria encompass transactions between different cryptocurrencies, between cryptocurrencies and traditional fiat currencies, and transfers of cryptocurrencies. Notably, transactions involving central bank digital currencies (CBDCs) are exempt from these requirements.

Additionally, crypto service providers are obligated to report client-specific information including full names, residential addresses, dates of birth, jurisdictions of residence, and taxpayer identification numbers. These obligations apply to both Canadian residents and non-residents.

Implementing CARF will require significant funding, prompting the budget to allocate CA$51.6 million ($37.3 million) to the Canada Revenue Agency (CRA) over five years starting from 2024-25. An annual budget of CA$7.3 million ($5.2 million) has also been earmarked for ongoing administration and operational costs.

The Canadian government aims to enforce these mandates by 2026, with the initial exchange of information from service providers scheduled for 2027.

The budget also addresses crypto tax evasion, introducing penalties for taxpayers who fail to comply with disclosure requirements. According to the budget, the rapid expansion of crypto markets poses substantial risks of tax evasion, necessitating regulatory measures to maintain a fair tax system.

Canada’s regulatory focus on the burgeoning crypto sector is evident in recent developments. In January 2024, securities regulators proposed new rules for public investment funds dealing with crypto assets. Under these rules, only alternative investment funds and non-redeemable investment funds would be permitted to directly trade or hold crypto assets.

This initiative closely follows a November 3 report from Coingecko, which identified Canada as one of the primary markets for Bitcoin ETFs.

Also Read: Norway Introduces Regulations on Cryptocurrency Mining

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