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Author: Admin | 2025-04-28
To print this article, all you need is to be registered or login on Mondaq.com. Introduction - Proposed Amendments to GST/HST Rules forCryptocurrency MiningIn February 2022, Canada's Department of Finance releaseddraft GST/HST legislation covering cryptocurrency mining. Theproposed rules will effectively treat cryptocurrency mining as anexempt supply: the cryptocurrency miner need not collect and remitGST/HST on the miner's compensation from mining, but the cryptominer also cannot claim input tax credits (or ITCs) for theexpenses relating to the cryptocurrency-mining operation.These proposals have not yet taken effect. But in anticipationof that possibility, Canadians who deal in cryptocurrency,non-fungible tokens, and other blockchain-based assets shouldeducate themselves about these new potential GST and HST rules.This article first gives a brief overview of Canada's GST/HST system. It then examinesthe proposed GST/HST rules for cryptocurrency mining and concludesby offering pro tax tips from our expert Canadian crypto-taxlawyers.Canada's GST/HST Regime: A Brief OverviewSubsections 165(1) and (2) of Canada's Excise TaxAct levy GST/HST on "every recipient of a taxable supplymade in Canada." A "taxable supply" captures mostbusiness transactions-e.g., a sale, transfer, barter, exchange,rent, or donation of a property or a service if the transactionoccurred in the course of conducting business.Yet although the recipient of the property or service (thepurchaser) bears the obligation to pay GST/HST, the obligation toactually collect and remit the GST/HST falls on the person whomakes the supply (the vendor). To this end, qualifying commercialvendors must register for a GST/HST number with the CanadaRevenue Agency, charge GST/HST on their services or sales, andremit that GST/HST to the CRA.That said, the Excise Tax Act exempts variousbusinesses from the obligation to collect GST/HST. For example, ataxpayer need not register nor collect GST/HST if its worldwiderevenues didn't exceed $30,000 during the last four fiscalquarters combined. (The threshold is increased to $50,000 if thetaxpayer is a public service body-e.g., a non-profit organization,a charity, a municipality, a school authority, a hospitalauthority, a public college, or a university.)Another example of a business that need not charge or collectGST/HST is a financial-services business. The Excise TaxAct's definition of a "financial service"captures various transactions involving money or a "financialinstrument":Operating or maintaining savings accounts, chequing accounts,or loan accounts;Currency-exchange transactions;The purchase or sale of a financial instrument;The use of a financial instrument as a method of payment;The lending or borrowing of a financial instrument;The issue, acceptance, or transfer of ownership of a financialinstrument;The provision of a financial instrument; andThe payment or receipt of money as dividends, interest,principal, benefits,
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