Canadian Lawyer

June 2022

The most widely read magazine for Canadian lawyers

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Page 27 of 51

26 LEGAL REPORT TAX While the CRA confronts new challenges surrounding cryptocurrency, tax lawyers tell Aidan Macnab the long-established principles still apply New crypto game, old tax rules WHEN CONTEMPLATING the tax impli- cations of cryptocurrency, says Vern Krishna, a tax lawyer and law professor, the first thing to consider is that they are not, in fact, currencies "as we know them." A central bank typically recognizes a currency as a medium of exchange "with relative stability and great acceptance." In that sense, he says crypto is a property, not a currency. "It's a relatively new phenomenon that hasn't been tested in any major or signifi- cant way," says Krishna. "We do not have the benefit of high-level judicial interpretation.… To have senior-level judicial administration, you're probably looking at eight to 10 years. That's how long it takes for a tax case to be determined." But many of the tax-law questions that arise from crypto are – unlike crypto – not new, says Nicolas Cloutier, a tax litigator at McCarthy Tétrault. "As a rule of thumb, most of the princi- ples that we apply to crypto now are just the principles that we apply to everything else. It's interesting, but it's not all novel… Traditionally, whatever money you make, unless it's a windfall – a gift from God or your parents – is either a capital gain or income." "This is simply a new form of transaction," says Krishna. "The principles remain exactly the same." Between capital gain or income, taxpayers' preferred classification of their crypto trading may depend on whether they enjoyed

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