Proposed GST/HST Changes regarding Cryptocurrencies
Finance released draft legislation that would exempt some cryptocurrencies, such as Bitcoin, from GST/HST. The legislation proposes to add “virtual payment instrument” to the definition of a financial instrument.
The proposal defines a “virtual payment instrument” as follows:
“…property that is a digital representation of value, that functions as a medium of exchange and that only exists at a digital address of a publicly distributed ledger, other than property that
- confers a right, whether immediate or future and whether absolute or contingent, to be exchanged or redeemed for money or specific property or services or to be converted into money or specific property or services,
- is primarily for use within, or as part of, a gaming platform, an affinity or rewards program or a similar platform or program, or
- is prescribed property;”
This proposed change is a welcome clarification of the CRA’s position when it comes to cryptocurrency and GST/HST.
What this means is that persons trading in cryptocurrencies that meet the definition of a “virtual payment instrument” will not need to charge or pay GST/HST on the value of the cryptocurrency being traded. In addition, the use of qualifying cryptocurrencies as a form of payment will also not attract any additional GST/HST beyond what would normally be charged on the goods/services being purchased.
More details can be found on the Department of Finance website here. The Government will accept comments on the draft proposals until June 17, 2019.
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