Canadian Revenue Agency: Bitcoin Considered as Foreign Fund or Property for Taxes

The Canadian Revenue Agency recently stated in section 233.3 of the Income Tax Act that bitcoin and other digital currencies are considered “specific foreign properties” and are to be treated as foreign funds or intangible properties.

The rules of the Income Tax Act document states that foreign properties including bitcoin that exceeds the value of $100,000 CDN should be reported with a tax form called T11135 to notify the amount of bitcoin held by an individual or an organization.

In the Canadian Revenue Agency Document No. 2014-0561061E5 “Specified Foreign Property,” the CRA states that digital currencies including bitcoin and other cryptocurrencies are considered as foreign funds if they are held or deposited outside of Canada and if they are not used in an active business.

Furthermore, the CRA explained in the document that a partnership which holds digital currencies are classified as a foreign property if “the total of all non-resident members’ shares of the income or loss of the partnership for the fiscal period is less than 90% of the total income or loss of the partnership for the period.”

Such partnership would be specified as a foreign property of the Canadian corporate owner and the digital currencies used in its operation will be also classified as foreign properties or funds of the partnership.

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