The Department of Finance (Canada) (Finance Canada) has
released, for public comment, draft legislative proposals (Draft
Proposals) to amend the Excise Tax Act (ETA) in order to
address certain issues regarding the treatment of virtual
currencies for the purposes of the goods and services
tax/harmonized sales tax (GST/HST).
Draft Proposals on Virtual Currency
Finance Canada proposes to exempt most transactions involving
cryptocurrencies from GST/HST by incorporating a new defined term,
"virtual payment instrument," in the definition of
"financial instrument." Most transactions involving
financial instruments are classified as "financial
services," which are exempt from GST/HST.
