- The CRA is interested in finding out details about bitcoin-linked activities of Canadians
- The agency says it remains committed to curbing tax evasion
- Canada’s CRA Points its Searchlight on Cryptocurrency Holders
While the price of Bitcoin and other blockchain-based virtual assets are struggling to recover from the 2018 ‘crypto winter,’ Canada’s Federal tax authority, the Canada Revenue Agency (CRA) is intensifying efforts to hunt down crypto tax evaders and it is now sending comprehensive questionnaires to suspected cryptocurrency traders and investors.
Death and taxes
Specifically, comprehensive questionnaires have been dished out to suspected ‘hodlers,’ asking them numerous questions with regards their cryptoassets-related activity over the past years.
The 13-pages long crypto questionnaires comprise 54 questions, and many of them have sub questions.
With the questionnaires, the CRA tries to find out whether the crypto trader being audited, trades on cryptocurrency exchange platforms that require users to undergo relatively lesser know-your-customer (KYC) procedures like Changelly or ShapeShift, the exact cryptocurrency tumblers or mixers they use, and whether a person had previously purchased Bitcoin or cryptocurrencies on a peer-to-peer basis.
“Do you use any cryptocurrency mixing services and tumblers? If so, which services do you use? Can you please give us the tracing history, along with all the cryptocurrency addresses you ‘mixed’? Why do you use these services? Asks a section of the questionnaire.
For the uninitiated, a cryptocurrency tumbler or crypto mixing service is a service that complicates cryptocurrency transaction, making it almost impossible to trace.
In other words, cryptocurrency mixers and tumblers make crypto transactions more anonymous and harder to track.
That’s not all; the CRA questionnaire also contains questions about participation in initial coin offerings (ICOs), cryptocurrency mining, and passive income earned from other node-related operations for residents of Canada.
Full disclosure of holdings necessary for taxes
The tax authority’s questionnaire also asks the person of interest to fill in all their crypto wallet addresses that are not linked with their custodial wallet accounts.
Commenting on the matter, a media contact at the CRA reportedly said that the agency is only trying to ensure every taxpayer in the nation carries out their civic duties without any exception whatsoever:
“The CRA is committed to helping taxpayers understand their tax obligations when using digital currencies, and to remind them that using cryptocurrency does not exempt them from their tax obligations.”
Though a vast majority of crypto investors still feel reluctant to pay their exact taxes, it’s noteworthy that the tax authorities are gradually winning the battle.
In January 2019, Blockchain Reporter informed that Overstock, a leading U.S. retailer had announced plans to remit some part of its taxes in Bitcoin.