Do we need to disclose if we participate in any ICOs and own tokens/coins for tax purposes?
Regardless of where it comes from, it is illegal to withhold income from the Canada Revenue Agency (CRA), and income and gains on assets are taxable, whether they are in the form of dollars, gold, foreign currency or cryptocurrency. If you are not sent tax forms from the exchange or service you use to buy or and sell cryptocurrencies, you are still required to report this income in your taxes.
If you are deemed to be in the business of buying or selling cryptocurrencies, your gains may be deemed to be ordinary income (rather than capital gains). In addition, cryptocurrencies received as payment for goods and services (including as a reward for engaging in cryptocurrency mining) are taxable in the year in which such payments are received.
You can read an archived version of the CRA’s statement about digital currency on the CRA website. Speak to a registered financial advisor or tax professional for information related to reporting income from the purchase of digital currencies. Learn more about cryptocurrencies on GetSmarterAboutMoney.ca.