What is the CRA Bitcoin Pilot Project?
The Canada Revenue Agency has targeted users of bitcoin, and other crypto assets, with audits. Those targeted have also been sent exhaustive questionnaires to fill out regarding their bitcoin-related purchases and trades.
The CRA is asking those targeted investors all about their crypto investments, including how and where they purchased the assets and whether they used cryptocurrency mixing services or tumblers, which cloud the trail back to the fund’s original source.
Another question allegedly asks whether investors have bought or sold assets on certain cryptocurrency exchanges that allow users to trade assets without disclosing their true identity. At Upside Accounting, we use cryptocurrency exchanges to buy and sell, but strongly encourage our clients to report this on their annual tax returns.
If you trade Bitcoin, have you reported or claimed any earnings on your Tax Return? Honesty is the best policy. You won’t be able to fly under the radar for long. As of 2017, the CRA’s cryptocurrency unit has been collecting intelligence and conducting audits. Penalties can be stiff and the interest will quickly add up!