News and Insights

Proposed Changes to GST/HST Treatment of Cryptoasset Mining Activities

Nouvelles fiscales févr. 06, 2023

On February 4, 2022, the Department of Finance Canada announced draft legislative changes concerning the application of GST/HST to cryptoasset mining activities and remuneration earned by performing these activities. The Canada Revenue Agency (CRA) recently released GST/HST Notice 324, Proposed Amendment Addressing Mining Activities in respect of Cryptoassets, to outline how the proposed new rules will apply to supplies of cryptoasset mining activities.

Under the proposed changes, Section 188.2 will be added to the Excise Tax Act (ETA), generally effective February 5, 2022, to deem cryptoasset mining activities not to be a supply for GST/HST purposes in most situations. Therefore, a person providing these activities is not required to collect GST/HST on any consideration received as remuneration. Similarly, if all or a part of the payment or remuneration for the performance of a mining activity is a property or service, the provision of such items is deemed not to be a supply.

Furthermore, a person is not eligible to claim input tax credits (ITCs) in respect of any property or services acquired, imported, or brought into a participating province in relation to cryptoasset mining activities, as these items are deemed to have been acquired for consumption, use, or supply otherwise than in the course of a person’s commercial activities. In addition, ITCs may not be claimed for GST/HST paid or payable by a person on supplies acquired for consumption, use, or supply in the provision of payments or remuneration for mining activities.   

The proposed rules include an exclusion to the deeming provisions where a mining activity is performed by a particular person for another person that is not a mining group operator for a group that includes the particular person and whose identity is known. Under these circumstances, the general GST/HST rules will apply (i.e., the mining activities will generally be subject to tax), creating the potential for confusion regarding the tax status of transactions between individual participants in cryptoasset mining activities.

For these purposes, a cryptoasset is defined as “property (other than prescribed property) that is a digital representation of value and that only exists at a digital address of a publicly distributed ledger.” This includes property that is a virtual payment instrument (as defined by Section 123(1) of the ETA). Property in the form of a digital representation of value, functioning as a medium of exchange, and that exists only at a digital address of a publicly distributed ledger would generally be considered a virtual payment instrument. However, property that confers a right to be exchanged for, redeemed for, or converted into money, property, or services and property used primarily as part of a gaming platform or rewards or affinity program are excluded from the definition of a virtual payment instrument.

Cryptoasset mining activities covered by the proposed legislation include:

  • Validation of transactions and their addition to a publicly distributed cryptoasset ledger at a digital address;
  • Maintenance of a publicly distributed cryptoasset ledger and allowing access to it; or
  • Providing computing resources to be used in connection with the above noted activities.

Cryptoasset mining activities performed before February 5, 2022, are subject to the general GST/HST rules. Accordingly, certain mining activities performed by a person on their own (i.e., solo) could be considered taxable supplies. However, with no identifiable recipient or liability for payment, there was likely no consideration for such taxable supplies and no corresponding requirement to collect GST/HST.  Since a solo miner could have been involved in commercial activities, ITCs may be available for GST/HST paid on inputs to the mining activities in limited circumstances. On the other hand, where mining activities were provided by a person that was part of a group, the facts in each situation would have to be reviewed to determine the application of GST/HST.

If you have any questions or concerns about how the new GST/HST rules for cryptoasset mining activities might impact your organization, please contact the Ryan TaxDirect® line at