Canada: Audit

The Canada Revenue Agency’s access to information about cryptocurrency and other crypto-assets is entering a new phase. Canadian taxpayers have always been responsible for identifying, valuing, classifying, and reporting taxable crypto activity, even where an exchange issued no Canadian tax slip, the transaction occurred through a foreign platform, or the assets were never converted into Canadian dollars. 

The Canada Revenue Agency’s (“CRA”) authority to conduct a cryptocurrency tax audit begins with subsection 231.1(1) of the Income Tax Act. It gives authorized CRA officials broad powers to inspect or examine relevant documents, records, property, processes, and other matters, and to require reasonable assistance and proper oral or written answers.

The Federal Court’s June 12, 2026 decision in Minister of National Revenue v KPMG Canada LLP, T-139-26, is a significant ruling on the limits of privilege assertions by third-party tax advisors in the context of CRA audits.

Canada’s Taxpayers’ Ombudsperson has initiated a systemic examination into delays at the Canada Revenue Agency (CRA), focusing on prolonged processing timelines and deficiencies in complaint-resolution processes.

Cross-border taxpayers, corporations, investors, and high-net-worth individuals increasingly face scrutiny from both the Canada Revenue Agency (CRA) and the Internal Revenue Service (IRS).

The perception that Internal Revenue Service enforcement is stronger than Canada Revenue Agency enforcement is common among taxpayers and advisors, particularly in cross-border contexts.

In 2251102 Ontario Inc. v. The King, 2026 TCC 61, the Tax Court of Canada considered whether a taxpayer can successfully challenge a tax reassessment based on a net worth analysis where the CRA has relied on indirect methods due to inadequate books and records.

As an experienced Canadian tax lawyer specializing in tax audits and investigations, I often advise clients on the critical distinctions between tax audits and criminal investigations under Canadian tax legislation, whether conducted by the Canada Revenue Agency (CRA) or Revenu Québec.

Fraud risk poses a critical threat to First Nations governance, with increasing scrutiny from community members, funders, and courts demanding greater financial accountability. Strong internal controls, active oversight mechanisms, and proactive fraud prevention strategies are essential to protect collectively owned resources and maintain stakeholder trust.