When CRA audits charities they typically send a long questionnaire to be filled in by the charity on many different issues. With some questionnaires, it is clear that they have a particular interest in a certain area such as foreign activities, but mostly these questionnaires are general.
I noticed in a general questionnaire that CRA is now asking about cryptocurrency donations. Here are some of the questions:
Cryptocurrency:
- During the audit period, did you own cryptocurrencies?
- What was the estimated total cost of the cryptocurrencies you acquired?
- How do you keep purchase and sale records for cryptocurrency?
- Do you accept cryptocurrencies as a form of donation?
- Describe the flow of funds for a typical transaction?
- How do you account for the sale in your accounting system?
- How do you determine the CAD equivalent for your books and records?
- Which bank accounts are linked with your receipts and payments of cryptocurrencies?
Cryptocurrencies are treated as “gifts-in-kind” if they are donated to charity. Unlike public securities that receive extra tax incentives when they are donated to charity, with cryptocurrencies the donor generally has to pay the capital gains but only receives the regular official donation receipt benefit. For 99.9+% of charities answering the above questions will be easy as they have not accepted cryptocurrencies!
While there is nothing wrong with charities receiving gifts of cryptocurrency per se there are concerns in some cases that the transactions may not be properly recorded or may involve people or entities affairs are not necessarily above board or the receipt may not be accurate for various reasons.
CRA has a Guide for cryptocurrency users and tax professionals and a virtual currency topic – these are both geared towards individuals and for-profits.
Related Posts
January 14, 2021
Going the Extra Mile: The Liability of Foreignness in U.S. Foundation International Grantmaking to Local NGOs
I recently ran across a very good article entitled: "Going the Extra Mile: The Liability of Foreignness in U.S. Foundation International Grantmaking…
January 13, 2021
Blackbaud’s “Tax Receipting and the Top Compliance Issues for Canadian Charities” delivered by Mark Blumberg
Mark Blumberg will be delivering a webinar for Blackbaud on "Tax Receipting and the Top Compliance Issues for Canadian Charities". Here is further…
January 2, 2021
La Presse Inc. is first registered journalism organization registered under new category of qualified donee
La Presse Inc. is now the first registered journalism organization registered under new category of qualified donee. You can see it listed here. As…