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ARTICLE · 28 OCTOBER 2019

Cryptocurrency Taxation Update

McCarthy Tétrault
McCarthy Tétrault
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On May 17, 2019, the Department of Finance ("Finance") released proposals to amend the Excise Tax Act (Canada) to treat certain virtual currency as a financial instrument for GST/HST purposes.

CanadaTechnology
SnIP/ITs Blog
SnIP/ITs Blog
Nicolas Désy
Nicolas Désy
Justin Shoemaker
Justin Shoemaker
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On May 17, 2019, the Department of Finance ("Finance") released proposals (the "Proposals") to amend the Excise Tax Act (Canada) (the "ETA") to treat certain virtual currency as a financial instrument for GST/HST purposes. If the Proposals become law, they will have a significant impact on whether certain participants in the virtual currency industry will be able to claim input tax credits ("ITCs") on expenses incurred in the course of making supplies of and processing transactions involving such virtual currency.

The Proposals would enact this change by introducing the new definition of "virtual payment instrument" into the ETA and by amending the definition of "financial instrument" in subsection 123(1) to include a reference to such definition. Based on the foregoing, sales of virtual payment instruments, use of virtual payment instruments as a payment medium, and a number of other common transactions using virtual payment instruments would either be exempt from

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