Almost every industry has regulatory bodies that oversee operations, make sure all businesses in the sector work hard to stay on the straight and narrow and issue new guidance regularly. For Canadian accountants, one such organization is the Canada Revenue Agency (CRA) .
The group recently announced a number of changes occurring within the nation's tax law that numerous companies within the industry need to be aware of in order to continue to provide the best quality accounting services possible.
Two of the things that are shifting in terms of legality are the use and classification of bitcoins - electronic currency - and tax planning.
Looking at bitcoins in a different light
According to Coin Desk, the CRA deemed that bitcoins have to be treated like any other type of currency and accounted for properly when tax time rolls around. The source noted that the group announced it would be doing this in May, so the recent release contains almost no new information - it just makes the mandate official.
Now, the same tax rules apply to transactions with bitcoins, which is simply electronic, intangible currency used online. The CRA said that because bitcoins can be traded, like regular commodities, it's now considered taxable income, the news outlet specified. The official laws on Barter Transactions will apply to the payments.
However, Coin Desk noted that no decision has been made on taxing bitcoin mining - or the virtual "printing out" of more bitcoins, as if they were dollars that needed to be duplicated at the Royal Canadian Mint.
Challenging tax avoidance
As CGA Magazine pointed out, some accountants use tax avoidance strategies to legally reduce taxes. That being said, the CRA has vowed to challenge these individuals in the future and investigate any potential misuses or abuses of the Income Tax Act.
What does this mean for accountants and bookkeepers? Again, though the source acknowledged that these practices are actually legal if done correctly, it might be best for firms to avoid these strategies altogether, or they'll likely face an inquiry. This also indicates that employees might want to look more into tax planning, the magazine noted.
Moreover, firms may want to make sure workers are well-acquainted with the General Anti Avoidance Rules of the CRA, because that's how the group is challenging professionals who try to avoid certain taxes.