CRA auditing crypto-currency market participants
Detailed questionnaire sent to at least 60 individuals
According to Forbes Online, the Canada Revenue Agency (CRA) has begun to audit individuals with significant involvement in cryptocurrency holdings or transactions.
In 2017, the CRA established a dedicated cryptocurrency unit said to be intended to build intelligence and conduct audits focussed on cryptocurrency risks as part of its Underground Economy Strategy.
Forbes reports there are currently over 60 active cryptocurrency audits, which involve a very detailed questionnaire, consisting of 54 questions with many sub-questions. Examples include:
- Do you use any cryptocurrency mixing services and tumblers? (Which can be used to intermix accounts and disguise the origin of the funds.) If so, which services do you use?
- Can you please provide us with the tracing history, along with all the cryptocurrency addresses you ‘mixed’? Why do you use these services?”.
Further questions address whether the taxpayer has purchased or sold crypto-assets from or to private individuals. If so, how they became aware of the sale opportunity, and how the transaction was facilitated. The questionnaire goes so far as to ask the taxpayer to list all personal crypto-asset addresses that are not associated with their custodial wallet accounts. It further asks whether they have been a victim of crypto-theft, or have been involved in ICOs (initial coin offerings) or participate in crypto-mining.
Not surprisingly, CRA has not disclosed what criteria it has used to target individuals with the questionnaires.