How to Report Crypto Tax in Canada. CRA Rules

Welcome to the definitive guide on cryptocurrency taxation in Canada. The world of digital assets is complex, and the tax implications can seem even more so. The purpose of this guide is to demystify the rules set forth by the Canada Revenue Agency (CRA), providing clarity and actionable steps for Canadian cryptocurrency holders. Whether you are a casual investor who has just purchased your first Bitcoin, an active trader, a miner, or someone who uses crypto for transactions, understanding your tax obligations is not just important—it’s essential.

In short, yes, cryptocurrency is taxed in Canada. The CRA does not view cryptocurrency as a government-issued currency, but rather as a commodity. This single classification is the foundation of its entire tax treatment. Consequently, any income or profit you generate from cryptocurrency transactions is subject to tax. This income generally falls into one of two categories: capital gains or business income.

This guide will walk you through every critical aspect of the topic. We will cover how the CRA officially views digital assets, how to determine whether your activities result in capital gains or business income, which specific events trigger a tax obligation, and how to calculate precisely what you owe. We will also provide a detailed breakdown of record-keeping requirements and how to report your crypto activities on your annual tax return. Our goal is to equip you with the knowledge to navigate the Canadian crypto tax landscape with confidence and ensure full compliance for the 2024 tax year and beyond.

How Does the CRA View Cryptocurrency? The Foundation of Crypto Tax

To correctly handle your crypto taxes, you must first understand the government’s perspective. The Canada Revenue Agency (CRA) has provided clear guidance on this: for the purposes of the Income Tax Act, cryptocurrency is treated as a commodity.

This is the most critical concept to grasp. It means the CRA views your Bitcoin, Ethereum, or any other digital token in the same way it views other forms of property that can appreciate or depreciate in value, such as stocks, mutual funds, gold, or real estate. It is fundamentally different from how it views official fiat currencies like the Canadian Dollar (CAD) or the US Dollar (USD), which are considered legal tender.

What does this “commodity” classification mean for you as a taxpayer?

Transactions are Dispositions of Property: When you sell, trade, or use your cryptocurrency, the CRA considers it a “disposition” of property. A disposition is the event that triggers a tax consequence. You are not simply spending money; you are disposing of an asset, and you must calculate whether you made a profit or a loss on that disposal.
Profits are Taxable: Any profit you realize from the disposition of your cryptocurrency is considered income and must be reported on your tax return. As we will explore in detail, this income is typically treated as either a capital gain or business income.
Value is Measured in Canadian Dollars: For every transaction, the value of the cryptocurrency must be determined in Canadian Dollars (CAD) at that specific moment. The Fair Market Value (FMV) at the time of the transaction is the benchmark used to calculate your gains or losses.

By classifying cryptocurrency as a commodity, the CRA integrates it into the existing framework of property taxation in Canada. This means that while the asset itself is new, the rules governing its taxation are well-established. For instance, the principles used to calculate capital gains on stocks are the same principles you will apply to your crypto assets. Understanding this foundational view is the first step toward accurately calculating and reporting your tax obligations. For official confirmation, the CRA outlines this position on its website, providing a clear basis for all crypto tax compliance in Canada.

Capital Gains vs. Business Income: The Two Paths of Crypto Taxation

Once you accept that crypto profits are taxable, the next crucial question is how they are taxed. In Canada, crypto-related income is almost always classified in one of two ways: as a capital gain or as business income. The distinction between these two is critical because it dramatically changes how much tax you pay.

Your specific activities, intent, and frequency of transactions will determine which category you fall into. It’s a factual determination, and the CRA assesses it on a case-by-case basis.

H3: Taxation as a Capital Gain: The Common Scenario for Investors

For the vast majority of Canadians who buy and hold cryptocurrency as a long-term investment, their profits will be treated as capital gains. This is generally the more favourable tax treatment.

A capital gain occurs when you sell or dispose of a capital asset for more than its original cost. The key feature of Canadian tax law regarding capital gains is the 50% inclusion rate. This means that only half of your total capital gain is added to your taxable income for the year. This taxable portion is then taxed at your marginal tax rate.

Example:
Imagine you bought a cryptocurrency for $2,000. A year later, you sold it for $3,000.

Capital Gain: $3,000 (Proceeds) – $2,000 (Cost) = $1,000
Taxable Capital Gain: $1,000 (Capital Gain) x 50% (Inclusion Rate) = $500

In this scenario, you would add $500 to your income for the year. If your marginal tax rate is 30%, your tax on this gain would be $150 ($500 x 30%), not $300. This 50% inclusion rate is a significant advantage of having your profits classified as capital gains.

H3: Taxation as Business Income: For Traders and Miners

If your cryptocurrency activities are more frequent, organized, and commercial in nature, the CRA may classify them as a business. This is common for day traders, high-frequency traders, and commercial crypto miners.

When your profits are considered business income, the tax treatment is less favourable: 100% of your net profit is added to your taxable income. There is no 50% inclusion rate.

The CRA considers several factors to determine if you are running a business, including:

Frequency of Transactions: A high volume of buying and selling suggests a business.
Period of Ownership: Holding assets for very short periods is indicative of trading.
Knowledge of Securities Markets: Your level of expertise can point toward business activity.
Commercial Nature: Activities conducted in a business-like manner (e.g., having a business plan, dedicating significant time).
Advertising: Promoting that you are willing to buy or sell crypto.
Profit Motive: If your primary intention is to profit from short-term fluctuations.

For crypto miners, their activity is often considered a business from the outset if it’s done on a commercial scale, as they are acquiring assets through a sophisticated, resource-intensive process with the intent to profit.

H3: Comparison Table: Capital Gains vs. Business Income

To clarify the differences, here is a direct comparison:

Criterion	Capital Gains (Investor)	Business Income (Trader)
Inclusion Rate	50% of the net gain is taxable.	100% of the net profit is taxable.
Loss Treatment	Capital losses can only offset capital gains. They cannot reduce other income.	Business losses can be deducted against other sources of income (e.g., employment income).
Expense Deduction	Very limited. You can typically only deduct costs directly related to the transaction (e.g., trading fees).	You can deduct a wide range of business expenses (e.g., electricity for mining, computer hardware depreciation, software costs).
Common Activities	Buying and holding for the long term (HODLing), occasional trades.	Day trading, swing trading, frequent transactions, commercial mining operations.
Record-Keeping	Simpler. Requires tracking the cost base and proceeds for each disposition.	More complex. Requires full business accounting, tracking all revenues and expenses.

Determining your classification is a critical first step. If you are unsure, it is highly recommended to consult with a tax professional who can assess your specific situation based on the CRA’s guidelines. For most individuals, however, the capital gains model will apply.

Key Taxable Events: When Exactly Do You Owe Tax?

A common and costly mistake in the crypto world is misunderstanding what constitutes a “taxable event”. A taxable event is any transaction that triggers a “disposition” of your cryptocurrency, requiring you to calculate a capital gain or loss. Many investors assume that tax is only due when they cash out into Canadian dollars, but this is incorrect. The CRA’s definition is much broader.

Here is a detailed breakdown of the most common taxable events. Each one requires you to calculate the Fair Market Value (FMV) in CAD at the time of the transaction.

H3: Selling Crypto for Fiat Currency (e.g., Canadian Dollars)

This is the most straightforward taxable event. When you sell your Bitcoin, Ethereum, or any other token on an exchange for Canadian dollars (or any other government-issued currency), you have disposed of your property. You must calculate the capital gain or loss based on the difference between your selling price and your Adjusted Cost Base (ACB).

Example: You sell 0.1 BTC for $7,000 CAD. You had acquired that 0.1 BTC for $5,000 CAD. The disposition triggers a $2,000 capital gain ($7,000 – $5,000), of which $1,000 is taxable.

H3: Trading One Cryptocurrency for Another (Crypto-to-Crypto Swaps)

This is the most frequently misunderstood rule. Every time you trade one cryptocurrency for another, you are triggering a taxable event. The CRA views this as a two-part transaction: you are simultaneously disposing of one property (Crypto A) and acquiring another (Crypto B).

You must calculate the capital gain or loss on the crypto you are getting rid of. The proceeds from this disposition are the Fair Market Value (in CAD) of the crypto you are receiving at that exact moment.

Example: You trade 1 ETH for 0.05 BTC.
1. Disposition: You have disposed of 1 ETH.
2. Proceeds: At the time of the trade, 0.05 BTC is worth $3,500 CAD. Your proceeds for the sale of 1 ETH are $3,500.
3. Calculate Gain/Loss: Let’s say your cost for that 1 ETH was $2,000. You have realized a capital gain of $1,500 ($3,500 – $2,000). You must report a taxable capital gain of $750.
4. New Cost Base: You now own 0.05 BTC, and its cost base for future calculations is $3,500.

Ignoring crypto-to-crypto trades can lead to a massive, unexpected tax bill and non-compliance.

H3: Using Crypto to Buy Goods or Services

When you use cryptocurrency to pay for anything—a coffee, a car, a digital service—it is a taxable event. Just like a crypto-to-crypto swap, you are disposing of your crypto asset. The proceeds are the Fair Market Value (in CAD) of the item or service you purchased.

Example: You buy a laptop for $2,000 and pay for it using a cryptocurrency. The cost base of the crypto you used was $500. You have realized a capital gain of $1,500 ($2,000 – $500) and must report a taxable capital gain of $750.

H3: Gifting Cryptocurrency

Gifting crypto to someone (who is not your spouse) is also a disposition and a taxable event for the person giving the gift. The CRA considers you to have sold the crypto at its Fair Market Value at the time of the gift.

Example: You gift 0.5 ETH to a friend. At that moment, 0.5 ETH is worth $2,000 CAD. Your cost for that crypto was $1,000. You are deemed to have a capital gain of $1,000, and you owe tax on the $500 taxable portion. Your friend, the recipient, is deemed to have acquired the crypto at a cost base of $2,000.

H3: Receiving Crypto as Payment for Work

If you are a freelancer or business and accept crypto as payment for goods or services, you must report this as business income. You must record the Fair Market Value (in CAD) of the crypto at the time you received it. This value becomes both your revenue for income tax purposes and the cost base for the crypto you now hold.

H3: Crypto Mining and Staking Rewards

Mining: If you are a hobby miner, the FMV of the mined coins on the day you receive them is generally considered income, but the tax treatment can be complex. If you are a commercial miner, this is clearly business income.
Staking: Rewards from staking are also considered income. You must report the FMV of the rewards in CAD on the day they are received. This value then becomes the cost base for those specific tokens.

H3: Airdrops and Hard Forks

Airdrops: When you receive tokens from an airdrop, the CRA generally considers the FMV of these tokens at the time of receipt to be zero. However, if the airdrop is received as part of a business promotion or as a reward, it could be considered income.
Hard Forks: When a cryptocurrency you hold undergoes a hard fork, you may receive new coins. If there is a clear new asset created, you generally have a cost base of zero for the new coins. The original coins retain their full original cost base. A taxable event only occurs when you later sell or trade either the original or the new coins.

H3: What is NOT a Taxable Event?

It’s also important to know what doesn’t trigger a tax consequence:

Buying and Holding: Simply purchasing cryptocurrency with Canadian dollars is not a taxable event. You only realize a gain or loss when you dispose of it.
Transferring Between Your Own Wallets: Moving your crypto from an exchange to your personal hardware wallet, or between any wallets you own and control, is not a disposition and is not taxable.

How to Calculate Your Crypto Taxes: A Step-by-Step Guide

Now we move to the most practical part: the calculation itself. The process requires meticulous record-keeping but is based on a straightforward formula. For investors treating their crypto as capital property, the calculation involves four key steps.

H3: Step 1: Understanding Adjusted Cost Base (ACB)

The Adjusted Cost Base (ACB) is the cornerstone of your tax calculations. It represents the total average cost of acquiring your cryptocurrency, including any transaction fees or commissions. You don’t use the price of a specific coin you bought; instead, you must calculate the average cost of all your identical coins held in a pool.

Why an average? Because if you buy 1 BTC today for $60,000 and another 1 BTC next month for $70,000, you don’t get to choose which one you sell. The CRA requires you to pool them. Your total cost for 2 BTC is $130,000, making your ACB per BTC $65,000.

How to Calculate ACB:
The formula is: Total Cost of All Coins (including fees) / Total Number of Coins Owned = ACB per Coin

Example of an ACB Calculation:

Let’s track John’s Ethereum purchases:

January 10: Buys 2 ETH at $3,000/ETH. Pays a $50 fee.
- Total Cost: (2 * $3,000) + $50 = $6,050
- Total Holdings: 2 ETH
- ACB per ETH: $6,050 / 2 = $3,025
February 15: Buys 3 ETH at $3,500/ETH. Pays a $75 fee.
- Total Cost of New Purchase: (3 * $3,500) + $75 = $10,575
- New Total Cost of Pool: $6,050 (from Jan) + $10,575 = $16,625
- New Total Holdings: 2 ETH + 3 ETH = 5 ETH
- New ACB per ETH: $16,625 / 5 = $3,325

This new ACB of $3,325 per ETH is what John will use to calculate his capital gain when he sells.

H3: Step 2: Calculating Proceeds of Disposition

The Proceeds of Disposition is the total amount you received when you disposed of your crypto. It’s measured in Canadian dollars at the Fair Market Value of the transaction.

If you sell for cash, it’s the amount of cash received.
If you trade for another crypto, it’s the CAD value of the new crypto at that moment.
If you use it to buy a good/service, it’s the CAD value of that item.

You must also subtract any fees associated with the sale (e.g., exchange withdrawal fees) from your proceeds.

H3: Step 3: Calculating Your Capital Gain or Loss

This is the core calculation. The formula is simple:

(Proceeds of Disposition) – (Adjusted Cost Base of the Crypto Sold) = Capital Gain or Loss

Comprehensive Example:

Let’s continue with John. He now holds 5 ETH with an ACB of $3,325 per coin.

March 20: John sells 1 ETH for $4,000 CAD. The exchange charges a $20 fee.
- Proceeds of Disposition: $4,000 – $20 (fee) = $3,980
- ACB of the ETH sold: 1 ETH * $3,325 (ACB per coin) = $3,325
- Capital Gain: $3,980 – $3,325 = $655

John has a capital gain of $655 from this single transaction.

H3: Step 4: Applying the 50% Inclusion Rate

The final step is to determine how much of your gain is actually taxable. As discussed, for capital gains, this is 50%.

Taxable Capital Gain = Total Capital Gain x 0.50

John’s Taxable Gain: $655 x 0.50 = $327.50

John must add $327.50 to his total income for the year on his tax return. After the sale, he must also update his ACB pool for the remaining 4 ETH.

H3: How to Handle Capital Losses

What if the price goes down? If your proceeds are less than your ACB, you have a capital loss.

Example: John sells 1 ETH for $3,000. His ACB is $3,325.

Capital Loss: $3,000 – $3,325 = -$325

A capital loss of $325 is realized. You can use capital losses to offset capital gains in the same year. If you have more losses than gains, you have a net capital loss. This net capital loss cannot be used to reduce other income like your salary. However, you can carry it back to offset gains in any of the previous three years, or carry it forward indefinitely to offset gains in future years.

Record Keeping: The Golden Rule of Crypto Tax Compliance

If there is one non-negotiable rule for crypto tax compliance, it is this: keep meticulous records. The burden of proof is on you, the taxpayer, to support the figures on your tax return. Without proper records, calculating your ACB and capital gains is impossible, and you will be in a very difficult position if the CRA ever audits you.

For every single transaction—every buy, sell, trade, or spend—you must keep a detailed log. An Excel or Google Sheet is the minimum requirement, though many investors now rely on specialized crypto tax software to automate this process.

You must track the following information for every transaction:

Date of Transaction: The exact date you made the buy, sell, or trade.
Type of Transaction: Was it a purchase, sale, crypto-to-crypto swap, a gift, or a purchase of a good/service?
Cryptocurrency Involved: The specific type of coin or token (e.g., BTC, ETH, ADA).
Amount/Units: The quantity of the cryptocurrency you bought, sold, or traded.
Fair Market Value (FMV) in CAD: The price per unit in Canadian dollars at the time of the transaction. You must find a consistent and reliable source for historical price data.
Proceeds of Disposition: The total CAD value you received from the sale or trade.
Adjusted Cost Base (ACB): The cost base of the asset you disposed of.
Transaction Fees: The cost of any fees paid, in CAD. These are added to your cost base when buying and subtracted from your proceeds when selling.
Wallet Addresses: The public addresses for both sides of the transaction can be useful for verification.

This level of detail is essential for accurately calculating your ACB pool for each asset and for substantiating every capital gain or loss you report. Given the high volume of transactions many crypto users have, manually tracking this can be extremely challenging. This is why services like Koinly, CoinTracker, and Wealthsimple Tax have become popular. They can often connect directly to your exchange accounts via API and automatically compile your transaction history, calculate your gains and losses, and generate the necessary tax reports. [link to: Review of Best Crypto Tax Software for Canadians]

How to Report Crypto on Your Canadian Tax Return

After you’ve done the hard work of tracking and calculating, the final step is to report the information on your annual tax return. Knowing which forms to use is key.

For most investors treating crypto as a capital asset, the primary form is the Schedule 3 – Capital Gains (or Losses). This is the standard form used for reporting gains and losses from the disposition of any capital property, including stocks, real estate, and cryptocurrency.

Here’s how it generally works:

Aggregate Your Gains and Losses: You will need to calculate the total proceeds of disposition, the total adjusted cost base, and the total outlays and expenses (fees) for all your cryptocurrency transactions for the tax year. While you need detailed records for each transaction, you typically report the aggregated totals on Schedule 3.
Complete Schedule 3: You will enter your total proceeds, total ACB, and total expenses in the appropriate sections of the form. The form will guide you through calculating your total capital gain or loss.
Calculate the Taxable Amount: Schedule 3 will automatically apply the 50% inclusion rate to your net capital gain to arrive at your taxable capital gain.
Transfer to the T1 General: The final taxable capital gain figure from Schedule 3 is then entered on line 12700 (Taxable capital gains) of your T1 General Income Tax and Benefit Return. This amount is added to your other sources of income to determine your total taxable income for the year.

A Note on Form T1135 – Foreign Income Verification Statement

You may have an additional reporting requirement if you hold cryptocurrency on foreign exchanges or in wallets managed by foreign entities (which covers most major global exchanges like Binance or Coinbase). If the total cost amount of all your “specified foreign property” exceeded $100,000 CAD at any point during the year, you must file Form T1135.

“Specified foreign property” includes crypto assets held abroad. This threshold is based on the cost of the assets, not their market value. Failing to file Form T1135 when required can result in significant penalties, so it’s crucial to assess if this applies to you. [link to: Detailed Guide on Form T1135]

Frequently Asked Questions (FAQ) about Canadian Crypto Tax

The world of crypto tax is filled with common questions and concerns. Here are direct answers to some of the most frequently asked questions.

H3: What happens if you don’t declare crypto in Canada?

Failing to report your crypto gains is equivalent to tax evasion and can have severe consequences. The CRA is increasingly sophisticated in its ability to track digital asset transactions. If you are caught, you can face:

Full Payment of Back Taxes: You will owe the full amount of tax you originally failed to pay.
Interest Charges: The CRA charges compound daily interest on any outstanding tax balance.
Penalties: Penalties for failing to report income can be substantial, often calculated as a percentage of the unpaid tax. Gross negligence penalties can be as high as 50% of the understated tax.
Tax Evasion Charges: In serious cases, tax evasion can lead to criminal prosecution, resulting in fines and even jail time.

The CRA also has a Voluntary Disclosures Program (VDP), which allows taxpayers to come forward and correct inaccurate or incomplete information. If your disclosure is accepted, you may avoid penalties and prosecution, though you will still have to pay the owed taxes plus interest.

H3: How does the CRA know about my crypto transactions?

Many assume their crypto activity is anonymous, but this is largely a myth. The CRA has several ways of identifying crypto holders and their transactions:

Information Sharing with Exchanges: The CRA can legally compel cryptocurrency exchanges operating in Canada (and even some abroad) to provide them with user data. There have already been court orders forcing Canadian exchanges to hand over information on all their customers.
International Agreements: Canada has information-sharing agreements with many countries, which can be used to obtain data from foreign-based exchanges.
Blockchain Analysis: The blockchain is a public ledger. While transactions are pseudonymous, advanced analytics firms can trace and de-anonymize transactions, linking them to known exchange wallets or individuals.
Reporting from Financial Institutions: Banks are required to report large or suspicious transactions to FINTRAC (Financial Transactions and Reports Analysis Centre of Canada), which can be shared with the CRA.

It is safest to assume that the CRA can and will eventually find out about your crypto activities.

H3: Is buying crypto with Canadian dollars a taxable event?

No. The simple act of purchasing cryptocurrency with fiat currency (like CAD) is not a disposition. It is an acquisition. You are establishing your cost base at this point, but you do not realize a gain or loss until you sell, trade, or otherwise dispose of that crypto.

H3: Are NFTs (Non-Fungible Tokens) taxed the same way?

Yes. The CRA’s guidance on digital assets is broad enough to include NFTs. An NFT is considered a unique type of property. The same rules apply:

Minting an NFT: If you create and sell an NFT, the profit is likely considered business income.
Buying and Selling NFTs: If you buy an NFT as an investment and later sell it for a profit, this is typically a capital gain, subject to the 50% inclusion rate.
Every sale or trade of an NFT is a taxable event.

You must track the ACB and proceeds for each unique NFT you transact with.

H3: What about the Superficial Loss Rule?

The superficial loss rule prevents investors from selling a property to realize a capital loss and then immediately buying it back. A superficial loss occurs if you, or a person affiliated with you, sell a property for a loss and buy an identical property back within 30 calendar days before or after the sale date (a 61-day window).

If this rule applies, your capital loss is denied. Instead, the denied loss is added to the ACB of the repurchased property. While the CRA has not explicitly stated that this rule applies to crypto, it is widely assumed that it does, as crypto is treated as property like stocks, where the rule is well-established.

Conclusion: Key Takeaways and Your Next Steps

Navigating cryptocurrency taxation in Canada requires diligence, but it is manageable when broken down into its core principles. By understanding the rules and maintaining excellent records, you can ensure you are fully compliant and avoid future penalties.

Here are the key takeaways from this guide:

Crypto is Property: The CRA treats cryptocurrency as a commodity, not a currency. All tax rules stem from this fact.
Dispositions are Taxable: You owe tax when you sell, trade, or use your crypto, not just when you cash out to Canadian dollars.
Capital Gains vs. Business Income: Most investors will be taxed on 50% of their net profits (capital gains). Active traders will be taxed on 100% of their net profits (business income).
ACB is King: You must calculate the Adjusted Cost Base (the average cost) for each type of crypto you own to determine your profit or loss.
Record Everything: Meticulous record-keeping is not optional; it is your primary defense and a legal requirement.

Your immediate next step should be to establish a system for tracking your transactions. If you haven’t been doing so, start now. Reconstruct your past transaction history as best you can using reports from your exchanges. Consider using crypto tax software to ease this burden.

Disclaimer: The information provided in this article is for informational purposes only and is not intended to constitute legal or tax advice. The tax laws are complex and subject to change. Your individual circumstances can significantly affect the tax treatment of your cryptocurrency transactions. You should consult with a qualified professional tax advisor or accountant to obtain advice with respect to your particular situation.

FAQ

Is cryptocurrency taxable in Canada?

Yes, cryptocurrency is taxable in Canada. The Canada Revenue Agency (CRA) treats crypto as property, not legal tender. Gains from crypto transactions are subject to either capital gains tax or business income tax depending on your trading activities and frequency.

How much tax do you pay on crypto in Canada?

Tax on crypto depends on transaction type and income level. For capital gains, you pay income tax on 50% of profits at federal rates from 15% to 33%. For business income, you pay tax on 100% of profits at your marginal tax rate.

What triggers a taxable event for cryptocurrency in Canada?

Taxable events include selling crypto for fiat currency, trading one cryptocurrency for another, spending crypto on goods or services, gifting crypto, receiving staking rewards, airdrops, and mining rewards. Simply holding crypto is not taxable.

Do I need to report crypto if I didn't sell in Canada?

Generally no, holding cryptocurrency without selling is not taxable and doesn't require reporting. However, if you hold foreign assets over $100,000 CAD, you may need to report all foreign assets including crypto on specific forms.

What's the difference between capital gains and business income for crypto?

Capital gains apply to occasional crypto trading as investment, taxing 50% of profits. Business income applies to frequent, commercial crypto activities, taxing 100% of profits. The CRA determines classification based on trading frequency and intent.

How do I calculate crypto taxes in Canada?

Use the Adjusted Cost Base (ACB) method to calculate gains and losses. Subtract your cost basis from sale proceeds. For capital gains, pay tax on 50% of net gains. For business income, pay tax on 100% of profits.

What forms do I need to file crypto taxes in Canada?

Report crypto capital gains on Schedule 3 form and crypto income on your T1 Income Tax Return. Both forms are filed as part of your annual tax return through CRA's My Account or tax software.

Can the CRA track my cryptocurrency transactions?

Yes, the CRA can track crypto transactions despite their perceived anonymity. The agency can request information from taxpayers and exchanges. Canada is implementing the Crypto-Asset Reporting Framework (CARF) by 2026 for enhanced tracking capabilities.

What happens if I don't report crypto taxes in Canada?

Not reporting crypto income is tax evasion with serious consequences. Penalties include fines up to 200% of taxes evaded and potential imprisonment up to 14 years. The CRA actively pursues unreported crypto income.

Are there any crypto tax breaks in Canada?

Yes, several tax breaks exist including the Basic Personal Amount ($15,705 in 2024), 50% capital gains inclusion rate, spousal tax credits, and ability to carry forward capital losses to offset future gains.

Is crypto mining taxable in Canada?

Yes, crypto mining is taxable. Hobby miners pay income tax when disposing of mined crypto. Business miners pay income tax on mining rewards upon receipt and again upon disposition based on fair market value.

Do I pay GST/HST on cryptocurrency transactions?

GST/HST treatment depends on the crypto type. Sales of virtual payment instruments like Bitcoin are exempt from GST/HST. Other crypto assets may be subject to GST/HST as taxable supplies of intangible personal property.

What is the crypto tax rate in Canada for 2025?

Federal crypto tax rates for 2025 range from 15% on income up to $57,375 to 33% on income over $253,414. Provincial taxes apply additionally. Only 50% of capital gains are taxable at these rates.

Can I deduct crypto trading expenses in Canada?

Business crypto traders can deduct legitimate business expenses like computers, software, and trading fees. Individual investors generally cannot deduct expenses unless they qualify as carrying charges or investment counsel fees under specific conditions.

Is transferring crypto between wallets taxable?

No, transferring cryptocurrency between your own wallets is not taxable. This is considered moving property you already own rather than disposing of it. However, ensure you maintain proper records of all transfers.

How are staking rewards taxed in Canada?

Staking rewards are generally taxed as income at fair market value when received. If you later sell the staked crypto, any additional gain or loss is treated as a capital gain or loss.

What records should I keep for crypto taxes?

Maintain detailed records including transaction dates, amounts, fair market values, wallet addresses, exchange statements, and receipts. Keep records for at least six years after filing your tax return as required by CRA.

Are NFTs taxable in Canada?

Yes, NFTs are taxable in Canada. They're treated as digital property subject to capital gains tax when sold, traded, or disposed of. Creating NFTs may be considered business income depending on frequency and commercial intent.

Can I use crypto losses to offset other capital gains?

Yes, crypto capital losses can offset capital gains from any source including stocks, bonds, and real estate. Net capital losses can be carried back three years or forward indefinitely to offset future gains.

Is receiving crypto as payment for services taxable?

Yes, receiving cryptocurrency as payment for goods or services is taxable business income. Calculate the value based on fair market value at the time of receipt and report it as regular income.

What is the superficial loss rule for crypto?

The superficial loss rule denies capital losses if you or affiliated persons acquire identical crypto within 30 days before or after the loss. The denied loss is added to the cost base of the repurchased crypto.

Do I need to pay tax on crypto airdrops in Canada?

Crypto airdrops are generally taxable as income at fair market value when received. If you later sell the airdropped tokens, any additional gain or loss is treated as capital gain or loss.

When is the deadline for filing crypto taxes in Canada?

The Canadian tax year runs January 1 to December 31, with tax returns due April 30 of the following year. Self-employed individuals have until June 15 but must pay any taxes owed by April 30.

CRA Rules for Crypto Tax in Canada