Canada to begin implementing international crypto tax reporting standard

Based on a budget addendum released in 2024, Canada intends to implement the International Crypto-Asset Reporting Framework (CARF) for tax purposes by the year 2026. The country is taking an advanced approach to this upcoming regulation, which is anticipated to be adopted by 47 nations by the year 2027.

Crypto asset service providers (CASPs), including exchanges, brokers, dealers, and ATM operators, would face new reporting obligations from the CARF, regardless of whether they are individuals or businesses. The additional report highlighted stablecoins, derivatives issued as crypto-assets, and certain non-fungible tokens as examples of crypto assets subject to these requirements.

CASPs (Crypto Asset Service Providers) must provide details of transactions involving both crypto assets and fiat currency or other crypto assets to the Canada Revenue Agency (CRA). Notably, if the value of crypto asset transfers handled by CASPs, including payment processing, surpasses $50,000 USD, they are obligated to report these occurrences.

“Crypto-asset service providers would be required to obtain and report information on each of their customers, including name, address, date of birth, jurisdiction(s) of residence, and taxpayer identification numbers for each jurisdiction of residence.”

Canadians living permanently in CASP (if based in Canada) or conducting business there, are obligated to comply. Reporting of transactions, regardless if made by Canadians or non-Canadians, be it individuals or organizations, is required.

Central bank digital currencies and digital versions of traditional currencies like stablecoins will not be included in the Country-by-Country Reporting (CBCR) format, as they fall under revised guidelines of the Organisation for Economic Cooperation and Development (OECD) Common Reporting Standard (CRS) for exchanging tax information between international authorities.

Canada to begin implementing international crypto tax reporting standard

Data gathered through the CARF (Country-by-Country Reporting) would similarly be disseminated on an international scale, just like the CRS (Common Reporting Standard). The CARF was initiated by the OECD (Organisation for Economic Cooperation and Development), recognizing that the CRS failed to account for transactions outside of conventional financial institutions.

At a gathering of G20 finance ministers and central bank governors in October 2022, the OECD introduced the Common Reporting Framework (CARF). By November 2023, a total of 47 nations committed to implementing the CARF into their domestic laws by the year 2027. The Organization for Economic Cooperation and Development (OECD) is made up of 38 member countries, most of which are located in Europe.

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2024-04-18 19:54