Key takeaways:
- Canada anticipates implementing the global CARF for taxation by 2026, as stated in an addendum to the 2024 annual budget.
- The fact that the CRS did not record transactions that did not pass via conventional financial intermediaries served as the impetus for the formation of the CARF.
Canada anticipates implementing the global Crypto-Asset Reporting Framework (CARF) for taxation by 2026, as stated in an addendum to the 2024 annual budget.
The nation is gaining an early start on the new standard, which 47 nations are anticipated to follow by 2027.
Crypto asset service providers (CASPs), which include cryptocurrency exchanges, brokers, dealers, and operators of automated teller machines (ATMs), regardless of whether they are individuals or corporate entities, would be subject to additional reporting obligations under the CARF.
Examples of crypto assets mentioned in the supplemental report included stablecoins, derivatives issued as crypto-assets, and other nonfungible tokens.
Transactions involving crypto assets and fiat, as well as crypto assets for other crypto assets, would need to be reported by CASPs to the Canada Revenue Agency (CRA). Any transactions of cryptocurrency assets by CASPs, including payment processing, that have a value of more than $50,000 USD must also be disclosed. Furthermore:
“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.”
CASPs who live in Canada or conduct business there must comply with the regulations. All transactions, whether by individuals or corporations, by residents or nonresidents of Canada, would be reported.
Digital currencies issued by central banks and digital representations of fiat currencies, like stablecoins, are not subject to the CARF because they fall under modifications to the Common Reporting Standard (CRS) of the Organisation for Economic Cooperation and Development (OECD) that facilitate information exchange between international tax authorities.
International sharing would also be possible with the data gathered under the CARF. The OECD created the CARF, just like the CRS. The fact that the CRS did not record transactions that did not pass via conventional financial intermediaries served as the impetus for the formation of the CARF.
In October 2022, the OECD presented the CARF to the G20 finance ministers and governors of central banks. 47 nations promised in November 2023 to enshrine the CARF in national legislation by 2027. The 38 members of the OECD are mostly from Europe.
