Digital currencies have taken the world by storm.
If you aren’t trading in a digital currency, it is my bet you know someone who is.
If you have been buying or selling cryptocurrencies this past year – whether trading, gifting, receiving or even making donations — you need to understand the tax consequences.
If you purchased $3,000 in Bitcoin and then sold it two months later for $15,000, that would be considered business income of $12,000.
If you under report or omit reporting that income, CRA could impose a penalty of $100 or 50 per cent of the understated taxes, whichever is greater.
If you purchase a digital currency for a long-term investment, any increase in value would be treated as a capital gain.
According to H&R Block, in 2021 the CRA won a court battle to obtain customer data from cryptocurrency trading platform Coinsquare, including the names and details of all active and inactive customer accounts.
To be fair, this is likely a work in progress and just because you may not be audited this year, please don’t assume you are getting a free pass.