The landscape for crypto-asset taxation in Canada has shifted decisively. Taxpayers who have held or traded digital assets without fully reporting corresponding earnings may find that waiting is no longer a viable option. With regulatory pressure escalating and opportunities to address past non-compliance becoming more favourable, now is the time to consider voluntary disclosure. Bringing undeclared crypto earnings into compliance aligns with growing enforcement trends and evolving relief frameworks, positioning Canadian taxpayers to better manage their legacy risk.
In the context of cryptocurrency filings, the role of a specialized Crypto Tax Lawyer is essential for determining whether the Canada Revenue Agency (CRA) will classify your earnings as business income (as opposed to capital gains), and how they will classify your business (which changes your reporting obligations). Their help is also vital for maximizing your chances of a successful Voluntary Disclosures Program (VDP) application.
When dealing with unreported crypto gains or mining income, simply hoping not to be noticed is a risky strategy. The Canada Revenue Agency (CRA has enhanced its data-gathering capabilities and is actively targeting unreported crypto transactions, making corrective disclosure far more advisable than delaying. Meanwhile, the CRA’s updated VDP, effective 1 October 2025, introduces meaningful changes that favour those who act now.
Heightened Enforcement Makes Information-Sharing Easier
The CRA has increased its enforcement activities (audits and investigations) and its focus on crypto-asset compliance. Peer exchanges have been compelled to provide user transaction data under the upcoming Crypto-Asset Reporting Framework (CARF), which extends global reporting by crypto-asset service providers. CRA also updated its primary information processing system, InfoDec, in January of 2025. This means undeclared crypto activity will likely be flagged and identified sooner.
Why the 2025 VDP Reform Matters
The VDP reforms that take effect on October 1, 2025, are a major reason for coming forward ASAP. Under the new rules:
- A simplified application form (RC199) has been introduced, making the process more user-friendly.
- Eligibility has been broadened. For example, taxpayers who receive “education letters” or demands for information from the CRA about potential issues can still qualify; an improvement over prior, stricter criteria.
- The distinction between “unprompted” and “prompted” disclosures now replaces the former “General” and “Limited” programs. For unprompted disclosures (or those where only a general education letter has been sent to the taxpayer), you may receive up to 100 percent relief from penalties and 75 percent relief of interest. For prompted disclosures (where the CRA asks for specific information to be updated by a certain date), penalty relief is still up to 100 percent, with up to 25 percent interest relief.
- Look-back years have been clarified: six years for Canadian-sourced income, ten years for foreign-sourced.
Because of these changes, it’s a strategic moment; applying under the new framework can result in more favourable treatment compared to waiting longer and being forced into a prompted disclosure by a demand for information, or being disqualified altogether by one of the increasing number of audits and investigations.
Preparing for Disclosure
You will need to assemble your crypto transaction history: trades, conversions, receipts, wallets, dates, amounts and the value in Canadian dollars at each transaction time. The CRA’s guidance requires that crypto-asset users keep those records.
In a VDP application, you must make a full and accurate disclosure of the omitted amounts, pay or arrange payment of the tax owing, and submit the corrected or missing returns. The completeness of disclosure remains a cornerstone of eligibility.
In Conclusion
The intersection of enhanced CRA enforcement and a more accommodating VDP means that now is a unique window of opportunity. But delaying increases your exposure and reduces the range of relief. Whether the undeclared activity was trading, mining, staking, or crypto received as payment for services, make this the time to deal with your past to secure your future.
