Tax Insights: Finance releases draft legislative proposals to implement the Crypto-Asset Reporting Framework

Issue 2025-32

In brief

What happened? 

On August 15, 2025, the Department of Finance (Finance) released for consultation draft legislative proposals to implement the Crypto‑Asset Reporting Framework (CARF). The proposals mark a significant step in aligning Canadian tax transparency rules with the latest international standards developed by the Organisation for Economic Co‑operation and Development (OECD). The new rules will apply to crypto-asset service providers (CASPs) and are proposed to take effect starting with the 2026 calendar year.

Why is it relevant?

A new wave of tax transparency reaches the digital asset world. The 2024 federal budget had proposed to implement the CARF in Canada and Finance aims to align Canada with the OECD framework for digital assets.

Actions to consider

CASPs should be aware of incoming reporting obligations related to crypto assets. They will also need to implement, from the ground up, a whole new compliance program, and a system build‑up related to crypto reporting. Interested parties are requested to provide feedback on the draft legislation by September 12, 2025.

In detail

Background

The federal government expressed its commitment to implement the CARF in Canada in its 2024 budget. On August 15, 2025, Finance released draft legislative proposals that create Part XXI of the Income Tax Act (the Act) for crypto asset reporting, in alignment with the OECD’s CARF.¹ 

Digital and crypto assets

A crypto asset is defined as a digital representation of value that relies on cryptographically secured distributed ledger technology (such as blockchain) or similar technology to validate and secure transactions. This includes cryptocurrencies (e.g. Bitcoin, Solana, Ethereum), stablecoins, certain derivatives issued in crypto form, and some non-fungible tokens (NFTs) that can be used for payment or investment purposes.

A digital asset is defined as a digital representation of value. Digital assets may or may not rely on the blockchain. All crypto assets are digital assets, but not all digital assets are crypto assets.

Certain digital assets are specifically excluded from the scope of proposed Part XXI, including:

• central bank digital currencies
• specified electronic money products (such as certain regulated e‑money products)
• crypto assets that cannot be used for payment or investment purposes

CARF

CARF provides for the automatic exchange of information on crypto assets, CASPs and crypto asset holders, and was developed by the OECD to address the rapid development and growth of the crypto assets market and to ensure that recent gains in global tax transparency will not be gradually eroded. Draft Part XXI is effective starting with the 2026 calendar year and is designed to align with the OECD’s international standards for automatic exchange of information in tax matters.

CARF frequently references the Common Reporting Standard (CRS) (Part XIX of the Act) and is ultimately premised on the same core compliance pillars: due diligence and annual information reporting.

Due diligence

CASPs must apply due diligence procedures to identify reportable persons. This may involve collecting a self‑certification (as is done under CRS) or, for CASPs that are also financial institutions under Part XIX of the Act, relying on self‑certifications already on file. Self‑certifications must be collected for new crypto asset users (those with whom a CASP establishes a relationship after December 31, 2025). Crypto asset users with whom a CASP already has a relationship as of January 1, 2026 must be documented with a self‑certification (with limited exceptions) before January 1, 2027.

Annual information reporting

CASPs must file annual information returns that are expected to look and feel quite similar to Part XVIII (FATCA) and XIX (CRS) reporting. Returns must be filed electronically for each calendar year, before May 2 of the following calendar year, and will include detailed information about crypto asset users and their crypto transactions.

What’s next

While the first round of reporting will not take place until 2027 (for the 2026 calendar year), CASPs will need to start tracking relevant transactions and documenting crypto asset users as early as January 1, 2026. The Canada Revenue Agency is expected to release guidance related to proposed Part XXI, to assist CASPs as they navigate the interpretation and implementation of these new rules.

The takeaway

Part XXI, if implemented as drafted, is a significant expansion of information reporting requirements, with a short implementation timeline. However, we expect that Finance will receive requests to revise this timeline, which it could consider doing. Nevertheless, those affected by these new rules will need to move quickly to understand their new regulatory requirements and implement appropriate policies, procedures and systems.

1.  For more information on CARF and the crypto regulatory landscape, see our:
 - Tax Policy Bulletin "A significant milestone: Global implementation of the crypto-asset reporting framework" 
 - "PwC Annual Global Crypto Tax Report 2024"
 - "PwC Global Crypto Regulation Report 2025"