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Canada will tax your bitcoins

Canada will tax your bitcoins

The Canada Revenue Agency (the Canadian equivalent of the IRS) just issued its first release on how it will treat virtual currencies for taxation purposes. There is not much new here — the CRA sent an e-mail to the CBC back in April about bitcoin taxation — and the government leaves several questions unanswered. Still, it’s an actual release from the CRA and not just a communication to a news outlet, which is helpful to those advising taxpayers. And even though the interpretation bulletins and the release do not have force of law, this communication does at least put up some signposts about the CRA’s thinking about bitcoin.

The release — styled one of the CRA’s fact sheets on “digital currency” – is available here.

No Canadian tax practitioner will be surprised that a bitcoin-denominated transaction will often be taxable where that transaction would be taxable without bitcoin. For example, under subsection 5(1) of the Income Tax Act, a person’s income from office or employment includes “the salary, wages and other remuneration, including gratuities, received by the taxpayer in the year.” Salary, wages, and remuneration paid and received in bitcoins are taxable under this provision, just as salary, wages, and remuneration received in US dollars, UK pounds, or Euros are taxable. (Right now I’m leaning towards treating bitcoins for most Canadian tax purposes just like any other currency — more on this below.) For good measure, section 6 of the Act sets out a whole laundry list of items that are included in office and employment income — things like free rent, housing allowances, living expenses, insurance benefits, and a standby charge on the use of company cars. If you are a resident of Canada and receive employment income in bitcoins, you’ll be taxed on it. I think similar arguments can be made for many provisions in the Act, e.g., business income and so-called ‘passive’ investment income like dividends and royalties.

– See more at:

CRA issues first release on how it will approach virtual currency – See more at:


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This entry was posted on November 7, 2013 by and tagged .

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