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Canada has announced plans to adopt the OECD's Crypto-Asset Reporting Framework (CARF) by 2026, aligning with global efforts to standardize cryptocurrency taxation. The move aims to enhance transparency and regulatory oversight across crypto transactions.
Canada Advances with Early Adoption of Global Crypto Tax Reporting Standards by 2026
According to an addendum to the 2024 annual budget (via Cointelegraph), Canada plans to implement the international Crypto-Asset Reporting Framework (CARF) for taxation by 2026. The country is getting an early start on the new standard, projected to be adopted by 47 other countries by 2027.
The CARF proposes additional reporting requirements for crypto asset service providers (CASPs), including cryptocurrency exchanges, crypto-asset brokers and dealers, and crypto-asset automated teller machine operators, whether individuals or business entities. The supplemental report cited "stablecoins, derivatives issued in the form of a crypto-asset, and certain nonfungible tokens" as examples of crypto assets.
CASPs would be required to report to the Canada Revenue Agency (CRA) transactions involving crypto assets and fiat currency and crypto assets for other cryptocurrency assets. CASPs would also be required to disclose cryptocurrency asset transactions, including payment processing, if the amount exceeded USD 50,000. In addition:
“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.”
New Global Crypto Reporting Framework to Enhance International Tax Compliance, Excludes Central Bank Digital Currencies
CASPs residing in Canada or conducting business in Canada would be subject to the rules. Transactions between Canadian residents and nonresidents, whether persons or corporations, would be disclosed.
Central bank digital currency and "digital representations of fiat currencies" (such as stablecoins) would not be reported under the CARF, as they are covered by amendments to the Organisation for Economic Cooperation and Development (OECD) Common Reporting Standard (CRS) for information sharing among international tax authorities.
Information gathered by the CARF would also be shared internationally. The OECD designed the CARF, much as it did the CRS. The CARF was established in response to the CRS's failure to catch transactions that did not go via typical financial intermediaries.
In October 2022, the OECD announced the CARF during a G20 conference of finance ministers and central bank governors. In November 2023, 47 countries agreed to implement the CARF into domestic legislation by 2027. The OECD is comprised of 38 member countries, most of which are in Europe.
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