CRYPTOCURRENCY EXCHANGE CESSATION: Recordkeeping

Posted on October 13th, 2023 in Domestic Tax

Photo of a bitcoin standing upright on top of a bunch of bitcoins.

A June 7, 2023, CryptoTaxLawyer.com article (Binance Bids Canada Bye-Bye! Canadian Tax Implications for Cryptocurrency Investors and Traders) reminded Canadians about the importance of maintaining an offline record of transactions as exchanges, such as Binance, shut down in Canada. On May 12, 2023, Binance announced that Canadian users will be required to close any open positions by September 30, 2023.

Once the exchange is closed to Canadians, there is the possibility that access to records will disappear. Such records are necessary to support tax positions and filings. The article also noted that records may need to be maintained well beyond six years, as they can support the determination of tax that may occur much farther into the future. For example, if a cryptocurrency was purchased in 2015, but is sold in 2025, records must be maintained to support the cost of the cryptocurrency sold for reporting purposes in 2025.

ACTION ITEM: Ensure records of transactions are retained offline in the event that they are no longer available online in the future.

Download

Article originally published in: Tax Tips & Traps 2023 Third Quarter – Issue 143.