Canada strengthens cryptocurrency reporting requirements in 2024 budget.

The Canadian government has recently introduced new reporting requirements for cryptoasset service providers, which include exchanges, brokers, dealers, and ATM operators. These providers will be required to disclose complete transaction details to the government each year. This includes reporting transactions between different cryptocurrencies, between cryptocurrencies and fiat currencies, and transfers of cryptocurrencies.

Additionally, service providers will need to report client-specific information such as full names, residential addresses, dates of birth, jurisdictions of residence, and taxpayer identification numbers. These requirements apply to both Canadian residents and non-residents. To sustain the ongoing administration and operational costs, an annual budget of CA$7.3 million ($5.2 million) has been allocated.

The Canadian government aims to implement these mandates by 2026, with the initial exchange of information from service providers scheduled for 2027. The budget also includes provisions to mitigate crypto tax evasion, including penalties for taxpayers who fail to meet the disclosure requirements. Regulators in Canada have focused on the growing crypto economy in the nation, particularly with the implementation of new regulations.

Only alternative investment funds and non-redeemable investment funds will be allowed to trade or hold crypto assets directly. These developments are part of a larger effort to ensure a fair tax system and combat tax evasion in the crypto industry. The government emphasizes the need for regulation and the international exchange of tax information to keep pace with emerging threats.

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