Canada: Income Tax

Foreign exchange bureaus operating in Canada are subject to a comprehensive compliance regime under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, administered primarily by the Financial Transactions and Reports Analysis Centre of Canada, alongside tax reporting obligations enforced by the Canada Revenue Agency.

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).

A recent international law enforcement operation has highlighted the growing scale and sophistication of cryptocurrency fraud, while simultaneously raising complex tax issues for Canadian victims.

Section 160 of the Income Tax Act (ITA) is one of the most potent collection tools available to the Canada Revenue Agency (CRA). While most tax liabilities are personal to the individual who earned the income, section 160 creates a form of “derivative” or secondary liability.

Canadian taxpayers, including content creators, influencers, and digital entrepreneurs, who earn income from digital marketing activities—including online advertising through platforms such as Google AdSense, promotional services linked to NFT projects, and sponsorship arrangements with offshore entities—often assume that this income is not subject to GST/HST or is automatically zero-rated because it involves non-Canadian counterparties.

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.

On February 20, 2026, the Federal Court of Appeal (FCA) released its decision in Canada v. DAC Investment Holdings Inc. (DAC), 2026 FCA 35, overturning the Tax Court of Canada’s (TCC) ruling that a corporate continuance used to exit the Canadian-controlled private corporation (CCPC) regime did not amount to abusive tax avoidance.

Permanent establishment Canada analysis has become increasingly complex due to the OECD’s 2025 remote work guidance. Remote work permanent establishment Canada risk is now a central concern for businesses operating across borders and provinces.

Many families face challenges that they could not have foreseen when their children were growing up and living at home that one or more, and in some cases all of them...