Canada’s Tax Agency Pursues $40M in Unpaid Crypto Taxes Amid Trudeau’s Proposed Capital Gains Increase

The National Post reports that Canada’s Revenue Agency (CRA) is actively pursuing $40 million in unpaid cryptocurrency taxes. The agency believes a significant amount of digital currency taxes remain unreported.

Simultaneously, Prime Minister Justin Trudeau is proposing a capital gains tax increase from 50% to 66% for Canadian taxpayers with annual gains over $183,000.

Canada’s CRA Targets $40M in Unpaid Crypto Taxes Amid Trudeau’s Capital Gains Tax Proposal

Canada’s Revenue Agency (CRA) is actively pursuing CAD 54 million ($39.5 million) in undeclared cryptocurrency transactions and profits, as reported by the National Post. Sahil Behal, the CRA’s compliance office director general, revealed that around 400 audits and inquiries involving cryptocurrency assets have begun, focusing on the fiscal year 2023-2024.

Key Points:

• Investigations Origin: These audits stem from the 2023-2024 tax year.
• Public Education Issues: The CRA faces significant challenges in educating the public about cryptocurrency tax obligations.

The CRA is following the lead of the U.S. Internal Revenue Service (IRS), which recently released a draft of tax Form 1099-DA to report proceeds from brokered crypto asset trades. A tax attorney noted that the CRA has been slow to provide clear guidelines on reporting crypto assets.

“Until recently, the CRA knew very little about cryptocurrency,” the lawyer said. “There was little guidance on taxation and reporting requirements, leaving many unaware that these transactions were taxable.”

Trudeau Proposes Raising Capital Gains Tax to Two-Thirds for Canadians

Prime Minister Justin Trudeau and his party are aiming to increase Canada’s capital gains tax rate from 50% to 66%. This proposal, part of the 2018 budget plan, targets not only corporations and wealthy individuals but also anyone with annual gains exceeding CAD 250,000 ($183,000).

Key Points:

• Target Group: The tax hike affects individuals with yearly gains over CAD 250,000 ($183,000).
• Survey Results: A Nanos Research Group survey found that 45% of Canadians believe the tax increase will harm the economy and stifle innovation, while 38% see it as fair, and the rest are undecided.

Bloomberg Tax reports that the proposed capital gains increase would impact all taxpayers, including estates. As Trudeau pushes this tax hike, the Biden administration in the United States is also seeking to increase the capital gains tax rate to 39.6%.

The mixed reactions among Canadians reflect concerns about the potential economic impact and fairness of the proposed changes. With nearly half of the population worried about economic harm, the debate continues over the best approach to taxation and economic growth.