• Nilgun Uzunhasanoglu

CRYPTOCURRENCY IN CANADA

CRYPTOCURRENCY

A cryptocurrency is an:

  • electronic money, and it is not available as bills or coins

  • digital asset/currency that can be used to buy goods and services or trade them to make a profit

  • ownership records are stored in online ledger with strong cryptocurrency to secure online transactions

  • no single organization for instance Bank of Canada creates digital currencies

Cryptocurrencies work using a technology called blockchain. Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system.

TYPE OF CRYPTOCURRENCIES

There are more than 6,700 different cryptocurrencies are traded publicly. Most popular ones:

1. Bitcoin

2. Ethereum

3. Tether

4. Polkadot

5. XRP

6. Cardano

7. Chainlink

8. Litecoin

9. Bitcoin Cash

10.Binance Coin


USING CRYPTOCURRENCIES

In order to buy cryptocurrencies, you will need a wallet, an online app that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to buy cryptocurrencies.

You need to have a public and a private key to use your wallet. Public keys are used to identify your wallet and Private keys are used to unlock your wallet and access your money. All transactions are recorded to a public ledger or “blockchain” that everyone can see.

With digital currencies you can by goods and services on the internet or in stores that accept digital currencies. And also you can buy and sell currencies in digital or cryptocurrency exchanges like stock market.

REGULATION OF CRYPTOCURRENCY IN CANADA

Canada allows cryptocurrencies, meaning that you can use digital currencies to buy goods and services on the Internet or in stores that accept digital currencies. You may also buy and sell digital currency on open exchanges, called digital currency or cryptocurrency exchanges.

On the other hand, cryptocurrencies are not considered legal tender in Canada which means cryptocurrency is not considered official currency in Canada only the Canadian dollar is considered official currency and digital currencies are not supported by any government or central authority, such as the Bank of Canada.

REPORTING AND TAXATION OF CRYPTOCURRENCY IN CANADA

The Canada Revenue Agency (CRA) treats cryptocurrency like a commodity for purposes of the Income Tax Act. Any income from transactions involving cryptocurrency is generally treated as business income or as a capital gain, depending on the circumstances.

If you use cryptocurrency to pay for goods or services, the CRA treats it as a barter transaction for income tax purposes. A barter transaction occurs when two parties exchange goods or services and carry out that exchange without using legal currency.

When you file your tax returns, you must report any gains or losses from selling or buying digital currencies. Not reporting income from such transactions is illegal. And, GST/HST applies on the fair market value of any goods or services that you buy using digital currency.

KEEPING BOOKS AND RECORDS FOR CRYPTOCURRENCY TRANSACTIONS

You should keep the following records for cryptocurrency transactions:

  • the date of the transactions

  • the receipts of purchase or transfer of cryptocurrency

  • the value of the cryptocurrency in Canadian dollars at the time of the transaction

  • the digital wallet records and cryptocurrency addresses

  • a description of the transaction and the other party

  • the exchange records

  • accounting and legal costs

  • the software costs related to managing your tax affairs


Contact us: If you need more information regarding this article, you can contact us at 647-987-2099 or send email to info@globalabcservices.com to book a free consultation.

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