Tax Insights: Finance releases draft legislative proposals to update the Common Reporting Standard

Issue 2025-34

In brief

What happened? 

On August 15, 2025, the Department of Finance (Finance) released for consultation draft legislative proposals to update the Common Reporting Standard (CRS), the changes commonly referred to as CRS 2.0. The new rules are proposed to take effect starting with the 2026 calendar year.

Why is it relevant?

CRS 2.0 aligns the CRS with the proposed crypto-asset reporting rules and expands reporting obligations for financial institutions (FIs).

Actions to consider

FIs with CRS reporting requirements should be aware of potential changes to their data collection, storage and annual reporting processes. 

In detail

Background

In its 2024 budget, the federal government affirmed its commitment to implement changes to the CRS. On August 15, 2025, Finance released draft legislative proposals that incorporate changes previously adopted by the Organisation for Economic Co‑operation and Development and align the CRS with proposed Part XXI of the Income Tax Act (the Act) for crypto‑asset reporting.¹

Expanded information reporting

CRS 2.0 would require FIs to include additional data fields on annual CRS information returns, including:

• whether each reportable person has provided a valid self‑certification
• what type of account is being reported
• whether each reportable account is a pre‑existing or new account
• whether the account is a joint account and if so, the number of joint account‑holders
• the role of each reportable controlling person and whether each reportable controlling person has provided a valid self‑certification
• if the reportable account represents an equity interest in an investment entity that is a legal arrangement, how each reportable person is an equity interest holder

With respect to the final two items above, CRS 2.0 proposes, for reporting periods ending before 2028, to require reporting of these data points by FIs only if the information is available in the electronically searchable data maintained by the FI. The first four data points above are expected to be included in the 2026 calendar year reporting, which is due in May 2027.

This may prove challenging for FIs that do not store these newly reportable data elements electronically. For example, while many of the data points captured on a self‑certification are recorded in electronically searchable records, whether a self-certification has been collected is not a commonly captured data point in many operating systems and therefore must be added to the system. FIs may need to review paper documents to confirm and record these additional reportable data elements in their book of record, so that they are available for the FI’s annual CRS reporting. Many FIs will need to modify the book of record itself to create input fields for these new reporting data elements.

Changes related to digital assets and proposed Part XXI

Proposed CRS 2.0 includes various additions and revisions intended to align CRS with proposed Part XXI of the Act (crypto-asset reporting) and minimize duplicative reporting between the two regimes.

Certain digital assets that are not considered crypto assets reportable under proposed Part XXI are instead reportable under the CRS. They include:

• central bank digital currencies (CBDCs) – not yet launched in Canada
• specified electronic money products (SEMPs)

Various CRS definitions have also been revised to incorporate digital assets, including:

•  “financial account” – amended to include accounts holding SEMPs and CBDCs, broadening the scope of financial assets that are reportable under CRS
• “financial asset” – expanded to include derivatives that reference relevant crypto assets
• “depository institution” – modified to include entities holding SEMPs or CBDCs for customers
• “investment entity” – amended to include entities investing, administering or managing relevant crypto assets for others, but excludes those only providing exchange services

These revisions significantly expand the assets, accounts and account‑holders subject to CRS reporting. Proposed CRS 2.0 also expands the number of entities that might meet the definition of a reporting Canadian FI and therefore subject to CRS due diligence and reporting requirements.

What's next

Although this expanded reporting will not occur until 2027 (for the 2026 calendar year), FIs should start reviewing electronically stored data and account holder documents, and reconfiguring reporting systems. The Canada Revenue Agency is expected to release revised CRS guidance this fall.

The takeaway

Proposed CRS 2.0, if implemented as drafted, expands the scope of reporting for FIs while attempting to harmonize CRS with the new proposed Part XXI crypto‑asset reporting rules. Although these new rules are proposed to take effect starting with the 2026 calendar year, we expect that Finance will receive requests to revise this timeline, which it could consider doing. The interplay between CRS 2.0 and the crypto‑asset reporting rules, and how each regime will potentially apply to traditional FIs and crypto‑asset service providers, continues to evolve – some entities may be pulled under the CRS umbrella for the first time. 

^{1. For more information, see our Tax Insights “Finance releases draft legislative proposals to implement the Crypto-Asset Reporting Framework.”}