While clients are likely aware that the sale of crypto needs to be declared for tax purposes, many may not realize that cryptocurrency (a blockchain-based digital asset) might also be considered foreign property, which may necessitate annual reporting if the clients’ total cost of all foreign property exceeds $100,000 at any point in a tax year. If so, clients are required to file Form T1135. The penalty for filing late is $25 per day to a maximum of $2,500, plus arrears interest.
The CRA (Canada Revenue Agency) stated that it is of the view that cryptocurrencies are funds or intangible property and are specified foreign property that should be disclosed on a taxpayer’s Form T1135 if the cryptocurrency in question is “situated, deposited or held outside of Canada.”
by Jamie Golombek, CPA, CA, CFP, CLU, TEP, managing director, tax & estate planning with CIBC Private Wealth in Toronto.
Additional information in 2021 article in the publication Tax for the Owner-Manager, Volume 21, No 4, Oct 2021 by tax lawyers William Musani and Ashvin Singh
from the July 2022 Edition of eFORUM / GlobalPacific – created by the editorial team of FORUM magazine