Category Archives: Analysis

Analysis, Canada

Cryptocurrency Audits Have Begun

Forbes reports that the Canada Revenue Agency (“CRA”) has initiated audits in the cryptocurrency space, sending select taxpayers a lengthy and exacting questionnaire requiring information regarding the taxpayer’s investments, cryptocurrency purchases and sales, mining history, assets, wallets, and Initial Coin Offering (“ICO”) participation.

The initiative is part of the CRA’s underground economy strategy, which describes its general purpose as protecting the integrity of Canada’s tax system and limiting the reduction in tax revenues that results from, amount other things, the digital economy.

In a public statement, the CRA commented that in 2017 it developed a dedicated crypotocurrency unit. Unsurprisingly, in this statement, the CRA refused to provide any information on the specific information or criteria they use to select files for audit, though it has confirmed that it currently has over 60 active audit files in the cryptocurrency space.

The questionnaire asks about the history of the taxpayer’s involvement in the cryptocurrency space, investments, transactions with specific exchanges such as shapeshift exchange and changelly, use of cryptocurrency mixing services and tumblers, and the reasons for using such services. The questionnaire also inquires into cryptocurrency storage, requiring information about both hot and cold wallets, and requires detailed information on trading activity, the source of funds used in cryptocurrency activities, investments in ICOs, commercial transactions using cryptocurrency and mining activities.

The questionnaire describes itself as an ‘initial interview’ and alerts taxpayers that there may be follow up questions.

The CRA’s cryptocurrency audits follow the example of the Internal Revenue Service, who has been actively auditing the cryptocurrency space for several years and which won a partial victory in late 2017 when the United States District Court Northern District of California ruled that the San Francisco coin exchange Coinbase must supply the IRS with identifying information on all users who had more than $20,000 in any one transaction type (buy, sell, send, or receive) in any one year during the 2013 to 2015 period.

Despite the underground, ‘off the grid’ character of cryptocurrency, Canadians who have invested in cryptocurrency, or engaged in the space in any capacity, may have significant tax liabilities.

The CRA takes the position that cryptocurrency is not a form of money, but a type of property. Generally speaking, what this means is that cryptocurrency will be taxed like a commodity such as gold, and taxpayers are required to report all associated gains and losses.

If you have invested in cryptocurrency, if you have engaged in the space as a miner or trader,  if you have been paid in cryptocurrency or if you have participated in an ICO, regardless of whether you have gains or losses, we advise contacting a tax professional to discuss your exposure.

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Analysis, British Columbia, Canada

British Columbia introduces an Employer Health Tax in 2019


BC’s, employers should become familiar with the new EHT rules so as to determine whether registration is required, and if so, whether early registration is required before May 15, 2019.

British Columbia has decided to implement an Employer Health Tax (“EHT”), effective January 1, 2019. The EHT is a payroll tax, calculated on gross employment income, that employers in British Columbia will need to self–assess and remit. For all employers that will be required to pay instalments during 2019, the deadline for registration for this new tax is May 15, 2019. For all other employers that will be subject to the tax, registration will not be required until the end of December 2019. Determining whether instalments will need to be paid requires an exercise in determining how much EHT would have been due in 2018 if the EHT had already been implemented. For any employer who would have owed more than $2,925 in EHT, instalment payments for 2019 will be required.


At its core, the EHT – similar to the one imposed in Ontario – can be a fairly simple tax to deal with in many circumstances, particularly for companies with employees that report for daily work at a location in British Columbia. However, for companies with employees that report for work in multiple provinces, or that get paid from offices outside of British Columbia, or for non–Canadian companies that send employees into British Columbia (among many other potential scenarios), the rules can be much more challenging to apply, and can potentially lead to circumstances of double taxation or assessments for failure to properly report and pay the EHT.


The general rules indicate that employers with total annual payroll in British Columbia of $500,000 or greater will be liable to report and pay EHT, with an increased threshold for charities and non-profits, for whom EHT is not payable until their total annual British Columbia payroll reaches $1,500,000 (with certain other special rules for potential exemptions). However, determining whether you have any payroll amounts in British Columbia, and if so, whether you have crossed these monetary thresholds, can often be a more complicated matter, particularly for entities with related parties that may carry on some business in British Columbia or those that send employees into British Columbia for parts of the year.


At this time, we would advise all businesses that have employees working in British Columbia, whether full–time, part–time or even temporarily, to become familiar with the new EHT rules so as to determine whether registration is required, and if so, whether early registration is required before May 15, 2019. We would be pleased to assist with any questions that arise in trying to determine whether compliance will be required.

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Analysis, Canada

Cameco Corporation Wins Monumental Sham / Transfer Pricing Tax Case

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The Tax Court of Canada has ruled in favour of Cameco in its massive tax dispute with the Minister of National Revenue.  The Court held that the Minister was wrong to include $483.4 million earned by Cameco’s Swiss subsidiary in the mining giant’s income for its 2003, 2005, and 2006 taxation years and ordered the amounts be reversed out.  Also, approximately $98 million and $183.9 million were added back in computing Cameco’s resource profits for its 2005 and 2006 taxation years, respectively.

Had the Court upheld the reassessments, Cameco would have been liable for $11 million in taxes, plus interest and penalties, for those years.  Further, subsequent taxation years with the same issues would have resulted in Cameco being liable for a staggering $2 billion in taxes, plus interest and penalties.

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Analysis, Canada, Français, Quebec

Rapport annuel du Bureau de la protection des droits de la clientèle de Revenu Québec: il reste encore beaucoup à faire!

Depuis plusieurs années, de nombreuses pratiques de Revenu Québec (« RQ ») ont été dénoncées par le public, les médias et différents organismes. Ceci a contribué à la perte de confiance du public envers l’agence gouvernementale.

Dans son rapport annuel 2014-2015, le Protecteur du citoyen déplorait le comportement de RQ auprès des contribuables et soulignait, en résumé :

  • la judiciarisation inutile des désaccords ;
  • l’application de positions rigides malgré les décisions contradictoires des tribunaux ;
  • les méthodes de vérification inadéquates et abusives ;
  • l’émission d’avis de cotisation erronés basés sur des présomptions inadéquates;
  • le refus de RQ de considérer les explications de certains contribuables.

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Analysis, Canada, Cross-border (Canada/US)

Le processus d’adoption de l’IM est enclenché

Alain Ranger pratique depuis plus de 30 ans en droit fiscal, plus spécialement en droit fiscal lié au droit des sociétés et au droit des affaires. Au cours des années, Alain a développé une expertise reconnue dans une variété de domaines dont les fusions et acquisitions, les transactions transfrontalières, les réorganisations d’entreprises, les investissements étrangers, les financements structurés et la fiscalité des sociétés. Le 28 mai dernier, le ministre des Finances du Canada a déposé à la Chambre des communes un avis de motion de voies et moyens (l’« Avis ») officialisant ainsi l’intention du Canada de présenter un projet de loi pour mettre en oeuvre les propositions retenues de la Convention multilatérale pour la mise en œuvre des mesures relatives aux conventions fiscales pour prévenir l’érosion de la base d’imposition et le transfert de bénéfices (l’« IM »). L’Avis a été adopté par les parlementaires le 21 juin et le projet de loi a ainsi franchi l’étape de la première lecture à la Chambre des communes.

Pour fins de rappel, le Canada était l’un des signataires de l’IM le 7 juin 2017 et il avait alors annoncé son intention d’adopter les normes minimales proposées par l’OCDE dans le cadre des propositions BEPS ainsi que l’arbitrage obligatoire lié aux différends dans les conventions fiscales. L’Avis prévoit donc l’adoption de ces normes minimales, ainsi que d’autres mesures à l’égard desquelles le Canada avait initialement réservé sa position.

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