CRA states that supplies by a financial institution of crypto cannot be zero-rated unless it acquired the crypto directly from its “issuer”

CRA confirmed that, given the addition of “virtual payment instruments” (“VPI”) to the ETA definition of a “financial instrument,” supplies of crypto made to Canadian-resident recipients are exempt supplies, irrespective of whether the supply is by the miner or an investor.

Regarding whether supplies of VPI by financial institutions to non-resident persons are zero-rated, CRA noted that Sched. VI, Pt. IX, s. 1(e) specifically excludes from zero-rating a supply of a financial service made by a financial institution to a non-resident, where the service relates to a financial instrument (other than an insurance policy or a precious metal) that was acquired, otherwise than directly from a non-resident issuer, by the financial institution acting in its capacity as principal. CRA concluded that, therefore, there would be no zero-rating where a particular supplier of a VPI had acquired that VPI “otherwise than directly from a non-resident issuer of the VPI.”

CRA did not explain when or how crypto can be considered to be “issued” to anyone, and perhaps it considers this to be possible.

Neal Armstrong. Summary of 25 March 2021 CBA Commodity Taxes Roundtable, Q.4 under ETA s. 123(1) – financial service – (d), and Sched. VI, Pt. IX, s. 1(e).