Canadian Taxation Authorities have asked local crypto trading platforms to immediately provide information relating to customers. Failing to comply will entail consequences which also include initiating legal proceedings.
In an attempt to supervise and regulate the crypto industry, the Canadian Government is using taxation authorities to do the job. Canada Revenue Agency (CRA) is the authority that has been tasked to supervise the Canadian crypto industry. In addition, CRA has been authorized by the Canadian Government to impose necessary laws and policies for regulating the industry.
Aimed with the object of regulating crypto, CRA has officially written to every single crypto trading platform operating in Canada. The authority has asked crypto trading platforms to immediately submit all necessary information of their customers to the authority. For instance, the Authority requires to know who the customers of the trading platforms are and whether they are taxpayers or not. In addition, the Authority wishes to know who is a non-filer and whether such a person falls under the tax net or not.
The scope provided to CRA is wider and may put the majority of crypto trading platforms into various troubles.
Evidently, Coinsquare is the largest and most populated with customers’ crypto trading platform in Canada. When CRA asked for submission of the information from Coinsquare, instead of providing the information, it opted to contest. Legal proceedings were then initiated by Coinsquare but not even the Court provided any relief to Coinsquare. In fact, the case was decided against Coinsquare and in favor of CRA.
The ruling was penned down on Friday the 19th March, 2021 by one of the Federal Judges of Canada. In the ruling, the Court came to the conclusion that Coinsquare is liable to share information with CRA. Resultantly, Coinsquare is left with no choice but to submit the required information to CRA.
Recently, it has been apprised by Coinsquare, Canada that it will soon be providing requested data to CRA. As per Coinsquare’s estimate, there are at least 5 to 10% of customers whose data will be shared with CRA. The trading platform currently holds more than 400,000 customers across Canada. The single relief granted by the Court to Coinsquare was that Coinsquare can share the data relating to its high-profile customers only.
Even after losing the Court battle, it has come to the knowledge of Coinsquare that CRA will be asking for further information. Further notice of seeking information from CRA is anticipated by Coinsquare under the head “Unnamed Persons Requirement”.
This additional information will be required to see whether the customers are complying with Excise and Income Tax laws. Although so far notice has not been received but it is expected to be received soon and will 15 days to ensure compliance. If Coinsquare is failed to comply with the notice, then legal consequences can be initiated against the trading platform.