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Canada Set to Implement International 'Crypto-Asset Reporting Framework' by 2026

Canada Set to Implement International 'Crypto-Asset Reporting Framework' by 2026

Apr 19, 2024

Canada Set to Implement International 'Crypto-Asset Reporting Framework' by 2026

Canada is positioning itself to adopt the international Crypto-Asset Reporting Framework (CARF) for taxation by the year 2026, ahead of the global expectation for 47 countries to incorporate the standard by 2027. This initiative, as disclosed in a supplement to the 2024 annual budget, aims to 'enhance transparency in cryptocurrency transactions' and clamp down on potential tax evasion.

The CARF would require crypto asset service providers (CASPs), including exchanges, brokers, dealers, and automated teller machine operators, to report details of transactions to the Canada Revenue Agency (CRA). These details encompass Bitcoin transactions and fiat currencies, as well as exchanges of one crypto asset for another, with a reporting threshold for transfers exceeding $50,000 United States dollars. CASPs, whether operating within or conducting business with Canada, would also have to disclose customer information, such as names, addresses, birth dates, and taxpayer identification numbers.

Notably, the new reporting requirements will not extend to central bank digital currencies and certain digital representations of fiat currencies like stablecoins, which are already covered under amendments to the Organisation for Economic Cooperation and Development (OECD) Common Reporting Standard (CRS).

According to Finance Minister Chrystia Freeland, "Just as crypto-assets pose financial risks to middle-class Canadians, the rapid growth of crypto-asset markets poses significant risks of tax evasion. Regulation and the international exchange of tax information must keep pace with tax evasion threats in order to ensure a fair tax system."

The federal budget earmarks $51.6 million over five years to support the CRA in implementing and administering the new system, with an ongoing allocation of $7.3 million per year. The first exchange of information collected under the CARF with other countries is scheduled for 2027.

Additional measures introduced in the budget include penalties for taxpayers who fail to disclose information to the CRA and increased scrutiny on tax planners who enable tax evasion and aggressive tax avoidance.

Crypto-Asset Reporting Framework (CARF)

MSN Article

Cointelegraph Article


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