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Author: Admin | 2025-04-28
FINTRACUnfortunately, Canada’s attempt to answer questions regarding the treatment of cryptocurrency with the enactment of PCA left Canadians with more questions than answers. The PCA classifies persons or entities “dealing in virtual currencies”, an undefined term in the PCA, as money service businesses (MSB).[7] The purpose of this classification was to ensure that cryptocurrency users and businesses abide by the government’s Anti-Money Laundering laws (AML). Not only did the act reveal the government’s anxiety for embracing the new technology, but it also attempted to synchronize provincial regulation and federal interests. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), a federal agency akin to FinCEN in the United States, is an attempt to correct the asymmetry. FINTRAC assists in the prevention, detection, and enforcement of illegal financial activities and received authority from the 2014 PCA amendment to bring cryptocurrency in its scope, subjecting cryptocurrency users and businesses to FINTRAC’s oversight and to PCA’s regulations.[8]As cryptocurrency is geographically fluid, a Canadian user can find themselves subjected to various jurisdictions and agencies, depending on the location and activities of the user. At a minimum, any transaction utilizing cryptocurrency invokes the CRA’s policy on barter transactions because cryptocurrencies are a commodity.[9] The recipient of cryptocurrency from a transaction for the selling of goods or services must report the value in Canadian dollars on their income statement, either as business or capital gain.[10] The Canadian Goods and Services Tax/Harmonized Sales Tax (GST/HST) also applies to these transactions.[11] One who acquires crypto and does not engage in trading activity must report any gain or loss from the disposition as on account of capital.[12] However, a recreational cryptocurrency miner who does not mine for profit is exempt from taxation.[13] Cryptocurrency traders and investors must report their gains or losses as being on account of income.[14] These traders may be required to claim GST/HST in addition to any provincial taxes and will likely be subjected to PCA regulations as well. However, the CRA does not have a clear stance on the applicability of GST/HST to crypto traders.[15] Canadian traders should have a clear plan and be
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