Canada's CRA Targets 2,500 Dapper Labs Users in Major Crypto Tax Probe
The Canada Revenue Agency (CRA) has expanded its cryptocurrency tax enforcement efforts by targeting approximately 2,500 users of Dapper Labs in an investigation connected to about C$72 million in suspected unpaid taxes.
Over the past three years, the CRA has successfully recovered more than C$100 million through crypto-related audits. While no criminal charges related to crypto taxes have been filed since 2020, civil enforcement continues to be the primary approach.
In September, the CRA secured an unnamed persons order compelling Dapper Labs to disclose records for approximately 18,000 users; this was later narrowed to 2,500 accounts. This is the second such order issued against a Canadian cryptocurrency firm, following a 2020 order against Coinsquare.
Predrag Mizdrak, CRA's project lead, highlighted significant risks of non-compliance within the crypto user base. Internal data indicates that roughly 15% of users fail to file or file late, about 30% of filers are considered high risk, and up to 40% of users either do not file or are high risk.
The CRA's crypto unit includes 35 auditors working on over 230 files. Since 2020, five criminal investigations into digital assets have been launched, with four ongoing as of March. These investigations are often complex, involving cross-border elements and extended timelines.
According to Canadian tax rules, cryptocurrencies are treated as commodities. Casual investors are subject to capital gains tax, with 50% of profits taxable. Those frequently trading, mining, or operating businesses with crypto assets are taxed as business income. Most crypto transactions qualify as taxable dispositions.
Looking ahead, new reporting requirements under the OECD Crypto-Asset Reporting Framework will take effect in 2026. Cryptocurrency exchanges, brokers, and ATMs will be obligated to report relevant data to the CRA. The 2024 federal budget allocates more than C$50 million over five years to support these initiatives, including plans to establish a national financial crimes agency by 2026.
This intensified enforcement effort comes amid broader regulatory actions, such as FINTRAC's C$19.6 million fine against KuCoin, nearly C$177 million in penalties against Xeltox, and the RCMP's seizure of over C$56 million in assets following the shutdown of the TradeOgre platform.
