Crypto Tax Canada: Complete Guide for 2025
Cryptocurrency taxation in Canada is governed by the Canada Revenue Agency (CRA), which treats crypto as a commodity for tax purposes. Whether your crypto gains are taxed as capital gains (50% inclusion rate) or business income (100% taxable) depends on your specific circumstances.
This comprehensive guide covers everything Canadian crypto investors need to know: CRA rules, tax rates, reporting requirements, superficial loss rules, and legal strategies to minimize your tax bill.
Quick Reference Guide
| Item | Details |
|---|---|
| Tax Authority | CRA (Canada Revenue Agency) |
| Capital Gains Inclusion Rate | 50% (half your gains are taxable) |
| Business Income | 100% taxable at marginal rates |
| Federal Tax Rates | 20.5% - 33% (plus provincial) |
| Tax Year | January 1 - December 31 |
| Filing Deadline | April 30, 2026 (for 2025 tax year) |
| Self-Employed Deadline | June 15, 2026 (but payment due April 30) |
| Foreign Property Reporting | T1135 if crypto held on foreign exchanges >$100k CAD |
| Superficial Loss Rule | 30 days before/after (limits loss claims) |
| Currency | CAD ($) |
Table of Contents
- Do I Need to Pay Crypto Tax in Canada?
- Capital Gains vs Business Income
- How Crypto is Taxed in Canada
- Calculating Your Crypto Tax
- Reporting Crypto to the CRA
- Tax Optimization Strategies
- TFSA and RRSP Considerations
- Provincial Tax Rates
- Common Mistakes to Avoid
- Frequently Asked Questions
Do I Need to Pay Crypto Tax in Canada?
Yes, if you're a Canadian resident or earn income from Canadian sources. The CRA requires all cryptocurrency transactions to be reported, and most trigger tax obligations.
Who Must Pay Crypto Taxes?
- Canadian residents - Anyone living in Canada (citizens, PR, temporary residents)
- Non-residents earning Canadian income - Limited tax obligations
- Canadian corporations - Taxed on crypto business income
What the CRA Says
The CRA has published guidance stating:
- Cryptocurrency is treated as a commodity (not currency)
- Crypto transactions are barter transactions
- Most crypto activities result in either capital gains or business income
- All transactions must be reported in Canadian dollars (CAD)
When You Have Tax Obligations
You owe taxes if you:
- Sold crypto for CAD
- Traded one crypto for another
- Used crypto to buy goods or services
- Earned crypto through mining, staking, or airdrops
- Received crypto as payment for work
- Traded crypto as a business
You don't owe immediate taxes if you:
- Only bought crypto and held it
- Transferred crypto between your own wallets
- Received crypto as a gift (tax is deferred until you sell)
Capital Gains vs Business Income
The most important distinction in Canadian crypto taxation: Are you an investor or are you carrying on a business?
Capital Gains Treatment (Preferred)
50% inclusion rate - Only half your gains are taxable
Characteristics:
- Infrequent transactions
- Long holding periods
- Limited knowledge of crypto markets
- No promotional activities
- Little time spent on crypto activities
- Investing personal funds
Example:
- Bought Bitcoin for $10,000
- Sold Bitcoin for $30,000
- Capital gain: $20,000
- Taxable amount: $10,000 (50%)
- Tax at 33% marginal rate: $3,300
Business Income Treatment
100% inclusion rate - All gains are fully taxable
Characteristics:
- Frequent transactions (day trading)
- Short holding periods
- Extensive market knowledge
- Promotional activities (social media, courses)
- Significant time spent trading
- Use of business assets (trading office, multiple screens)
- Trading patterns similar to a business
Example:
- Trading profit: $20,000
- Taxable amount: $20,000 (100%)
- Tax at 33% marginal rate: $6,600
CRA's Determination Factors
The CRA uses the "badges of trade" test from case law:
- Frequency of transactions - More = business
- Period of ownership - Shorter = business
- Knowledge of securities markets - Expert = business
- Security transactions as part of ordinary business - Yes = business
- Time spent - Significant time = business
- Financing - Borrowed money = business indicator
- Advertising - Promoted services = business
- Nature of property - Speculative = business indicator
Most casual crypto investors qualify for capital gains treatment. Active traders risk being deemed a business.
How Crypto is Taxed in Canada
Taxable Events
Capital Gains Events
-
Selling crypto for CAD
- Sold 1 BTC for $60,000 CAD → Taxable
-
Trading crypto for crypto
- Swapped 10 ETH for 1 BTC → Taxable disposal of ETH
-
Spending crypto
- Bought a car with 2 BTC → Taxable disposal
-
Converting to stablecoins
- Swapped ETH for USDC → Taxable
Income Events
-
Mining rewards
- Income = Fair market value when received
-
Staking rewards
- Income = Fair market value when received
-
Airdrops
- Free tokens = Income if you provided services
- True "airdrop" with no effort = Possibly not income until sold (gray area)
-
Interest from lending
- Interest earned = Income
-
Salary/payment in crypto
- Employment or self-employment income
Federal Tax Rates (2024)
| Taxable Income | Federal Rate |
|---|---|
| $0 - $55,867 | 15% |
| $55,868 - $111,733 | 20.5% |
| $111,734 - $173,205 | 26% |
| $173,206 - $246,752 | 29% |
| $246,753+ | 33% |
Plus provincial tax rates (see Provincial Tax Rates section)
Capital Gains Calculation
Formula:
Taxable Capital Gain = (Proceeds - ACB - Fees) × 50%
Where:
- Proceeds = Amount received
- ACB = Adjusted Cost Base (what you paid + fees)
- Fees = Transaction fees, gas fees
- 50% = Inclusion rate
Example:
- Bought 5 ETH at $2,000 each = $10,000 ACB
- Paid $50 in fees
- Total ACB: $10,050
- Sold 5 ETH for $20,000
- Paid $100 in fees
- Proceeds: $19,900
- Capital gain: $19,900 - $10,050 = $9,850
- Taxable amount: $4,925 (50% of $9,850)
Calculating Your Crypto Tax
Adjusted Cost Base (ACB)
The ACB is your "cost basis" - what you paid for the crypto plus related fees.
ACB includes:
- Purchase price
- Transaction fees
- Gas fees
- Exchange fees
ACB calculation methods:
Average Cost Method (CRA Preferred)
Must be used for identical properties. You calculate the average cost of all units.
Example:
- Jan: Buy 2 BTC @ $40,000 = $80,000
- Feb: Buy 1 BTC @ $50,000 = $50,000
- Mar: Buy 1 BTC @ $45,000 = $45,000
Total: 4 BTC for $175,000 Average ACB: $43,750 per BTC
Now sell 2 BTC @ $60,000 = $120,000 proceeds
- ACB: 2 × $43,750 = $87,500
- Capital gain: $120,000 - $87,500 = $32,500
- Taxable: $16,250 (50%)
Remaining: 2 BTC with ACB of $43,750 each
Tracking Multiple Coins
You must track ACB separately for each type of cryptocurrency:
- Bitcoin (BTC) - One ACB pool
- Ethereum (ETH) - Separate ACB pool
- Solana (SOL) - Separate ACB pool
- Each coin has its own average cost
Superficial Loss Rule
Canada has a wash sale rule: You cannot claim a capital loss if you (or affiliated persons) repurchase the same property within 30 days before or after the sale.
30-day rule:
- 30 days before the sale
- Day of sale
- 30 days after the sale
- Total: 61-day window
Example - Loss denied:
- Dec 1: Sell 1 BTC at $40,000 (loss of $10,000)
- Dec 15: Buy 1 BTC at $42,000
- Loss is denied (repurchased within 30 days)
- The $10,000 loss is added to the ACB of the new BTC
Example - Loss allowed:
- Dec 1: Sell 1 BTC at $40,000 (loss of $10,000)
- Jan 10: Buy 1 BTC at $42,000 (40 days later)
- Loss is allowed
Workaround:
- Sell BTC at a loss
- Buy ETH instead (different property, no superficial loss)
- Wait 31 days, then buy BTC back if desired
Foreign Exchange Considerations
All transactions must be reported in CAD.
When crypto is sold: Use the Bank of Canada exchange rate for the transaction date.
Example:
- Bought BTC with USD on a US exchange
- Must convert USD purchase price to CAD
- When sold, convert USD proceeds to CAD
- Gain/loss includes forex fluctuations
Reporting Crypto to the CRA
Required Forms
Schedule 3 - Capital Gains or Losses
For capital gains treatment:
- List each disposition
- Report total capital gains
- Apply 50% inclusion rate
- Transfers to Line 12700 of T1
Information required:
- Description of property ("Bitcoin", "Ethereum")
- Year of acquisition
- Proceeds of disposition
- Adjusted cost base
- Outlays and expenses
- Gain or loss
Form T2125 - Business Income
If you're a crypto trader carrying on business:
- Report gross income
- Deduct business expenses
- Calculate net profit/loss
Deductible expenses:
- Trading software subscriptions
- Data feeds and research tools
- Home office expenses
- Computer equipment
- Internet costs
- Professional fees (accountant, lawyer)
Form T1135 - Foreign Income Verification
Required if you held more than $100,000 CAD in foreign property at any time during the year.
Crypto on foreign exchanges counts as foreign property:
- Binance, Coinbase, Kraken = Foreign
- Canadian exchanges (Newton, Bitbuy) = Not foreign
What to report:
- Name of exchange
- Country of exchange
- Type of property (cryptocurrency)
- Maximum cost during year
- Cost at year-end
- Gross income (if any)
Penalty for not filing: $25/day (min $100, max $2,500)
Schedule 1 - Additional Income
For income from mining, staking, airdrops:
- Line 10400 - Other employment income (if from employer)
- Line 13000 - Other income (if not from employer)
Step-by-Step Filing
Step 1: Gather records
- Download transaction history from all exchanges
- Export wallet transaction history
- Calculate ACB for each coin type
Step 2: Calculate gains/losses
- Use crypto tax software (Koinly, Cointracking)
- Or manually calculate using average cost method
- Convert all amounts to CAD
Step 3: Complete Schedule 3
- Report each disposition
- Calculate total capital gains
- Apply 50% inclusion rate
Step 4: Check T1135 requirement
- Add up foreign crypto holdings
- File T1135 if over $100k CAD at any point
Step 5: Complete T1 return
- Enter capital gains on Line 12700
- Enter other income on appropriate lines
- Calculate total tax owing
Step 6: Keep records
- CRA can audit up to 3 years (6 for fraud)
- Keep all exchange records, wallet addresses, transaction IDs
Tax Optimization Strategies
1. Maintain Capital Gains Status
Avoid being classified as a business.
Strategies:
- Limit trading frequency
- Hold for longer periods
- Don't promote trading activities
- Keep detailed records showing investment intent
- Use a separate account for long-term holdings
2. Tax Loss Harvesting
Sell losing positions to offset gains.
Strategy:
- Before year-end, review portfolio
- Sell positions with unrealized losses
- Use losses to offset gains
- Avoid superficial loss rule (wait 31 days or buy different coin)
Example:
- Realized gains: $50,000
- Unrealized losses in altcoins: $20,000
- Sell altcoins to realize loss
- Net taxable gain: $30,000 vs $50,000
- Tax savings: $3,300 (assuming 33% rate × 50% inclusion)
3. Income Splitting with Family
Shift crypto gains to lower-income family members.
Methods:
- Gift crypto to spouse or adult children
- They sell it (taxed at their lower rate)
- Must be genuine gift with no expectation of return
Attribution rules:
- Gifts to minor children = Income attributes back to you
- Gifts to spouse = Future gains are theirs if you use their money
- Gifts to adult children (18+) = Fully effective
Example:
- You're in 53% combined bracket
- Adult child is in 20% bracket
- Gift $20,000 of appreciated crypto to child
- Child sells, pays tax at 20% vs your 53%
- Tax savings: 33% of taxable gain
4. Maximize RRSP Contributions
Reduce taxable income with RRSP.
Strategy:
- Sell crypto (trigger gain)
- Contribute proceeds to RRSP
- Get tax deduction offsetting the crypto gain
Example:
- Realize $30,000 capital gain
- Taxable amount: $15,000 (50%)
- Tax at 43% rate: $6,450
- Contribute $15,000 to RRSP
- RRSP deduction: $15,000
- Tax saved: $6,450
- Net tax on crypto: $0
5. Use Capital Losses
Capital losses can offset capital gains indefinitely.
Carryback: 3 years Carryforward: Unlimited
Strategy:
- Realize losses in high-income years
- Carry back to recover taxes paid in previous years
- Or carry forward to offset future gains
6. Consider Emigration
Leave Canada to realize gains tax-free elsewhere.
Departure tax:
- When you leave Canada, you have a deemed disposition
- Must pay tax on all unrealized gains (as if you sold everything)
- Can post security and defer payment
Example:
- You have $1M in unrealized crypto gains
- Emigrate to Portugal (crypto tax-free)
- Pay Canadian departure tax on the $1M
- Future gains in Portugal = tax-free
Only makes sense for very large holdings and commitment to leave Canada permanently.
7. Donate Crypto to Charity
Eliminate capital gains tax and get donation credit.
How it works:
- Donate crypto directly (don't sell first)
- No capital gains tax on the donation
- Get donation tax credit for fair market value
Requirements:
- Donate to registered Canadian charity
- Get official donation receipt
- Must donate the crypto itself (not cash after selling)
Example:
- Bought BTC for $10,000
- Now worth $50,000
- Donate BTC directly to charity
- No tax on $40,000 gain
- Donation credit: ~$11,500 (federal + provincial)
- Total benefit: $24,500 (saved capital gains tax + credit)
TFSA and RRSP Considerations
Tax-Free Savings Account (TFSA)
Can you trade crypto in a TFSA?
CRA position: Very risky and not recommended.
Issues:
-
Day trading in TFSA = Business income
- CRA can tax 100% of profits as business income
- Lose tax-free status
-
No qualified investments
- Crypto itself cannot be held in TFSA
- Bitcoin ETFs can be held
- Crypto company stocks can be held
-
Penalties:
- If CRA deems it business income: 100% tax
- Advantage tax: 100% on profits
- Can lose TFSA contribution room
Safe TFSA strategies:
- Buy and hold Bitcoin/Ethereum ETFs
- Buy crypto-related stocks (Coinbase, mining companies)
- Don't trade frequently
Example - What NOT to do:
- Day trade crypto in TFSA
- Make $100,000 profit
- CRA audits, deems it business income
- Tax bill: $50,000+ (100% tax on business income)
Registered Retirement Savings Plan (RRSP)
Similar issues as TFSA:
- Can't hold crypto directly
- Can hold Bitcoin/Ethereum ETFs
- Day trading = Business income risk
RRSP benefits for crypto investors:
- Deduct contributions to offset crypto gains
- Grow investments tax-deferred
- Withdraw in retirement at lower rates
Strategy:
- Trade crypto in regular account
- Use RRSP deductions to offset gains
- Hold ETFs in RRSP for retirement
Provincial Tax Rates
Combined federal + provincial rates (2024):
By Province (Top Marginal Rates)
| Province | Capital Gains | Business Income |
|---|---|---|
| Alberta | 24.5% | 48% |
| British Columbia | 27% | 53.5% |
| Manitoba | 25.8% | 50.4% |
| New Brunswick | 27% | 53.3% |
| Newfoundland | 28.8% | 54.8% |
| Nova Scotia | 29.5% | 54% |
| Ontario | 26.8% | 53.5% |
| PEI | 28.3% | 51.4% |
| Quebec | 26.7% | 53.3% |
| Saskatchewan | 23.5% | 47.5% |
Top marginal rates on capital gains = (Federal 33% + Provincial) × 50%
Key takeaway: Where you live affects your crypto tax bill significantly. Alberta and Saskatchewan have the lowest rates.
Common Mistakes to Avoid
1. Not Reporting Crypto-to-Crypto Trades
Mistake: Only reporting when cashing out to CAD.
Reality: Every crypto-to-crypto trade is a taxable event.
Consequence: Massive underreporting, CRA penalties.
2. Ignoring Staking Rewards
Mistake: Treating staking as "free money" with no tax.
Reality: Staking rewards are income when received.
Consequence: Unreported income, interest and penalties.
3. Not Tracking ACB Properly
Mistake: Guessing cost basis or using incorrect method.
Reality: Must use average cost method, tracked separately per coin.
Consequence: Incorrect tax calculations, potential audit.
4. Triggering Superficial Loss
Mistake: Selling at a loss for tax purposes, buying back immediately.
Reality: Loss is denied if repurchased within 30 days.
Consequence: Can't claim the loss.
5. Day Trading in TFSA
Mistake: Thinking TFSA makes crypto trading tax-free.
Reality: CRA can tax 100% of profits as business income.
Consequence: Huge unexpected tax bill.
6. Not Filing T1135
Mistake: Not reporting foreign crypto holdings over $100k.
Reality: Mandatory reporting, penalties for non-compliance.
Consequence: $2,500 penalty plus potential criminal charges.
7. Not Keeping Records
Mistake: Deleting exchange accounts, losing transaction history.
Reality: Must keep records for 6 years.
Consequence: Can't prove cost basis, pay tax on 100% of proceeds.
8. Claiming Business Losses as Capital Losses
Mistake: Treating business income inconsistently.
Reality: Can't pick and choose (gains as capital, losses as business).
Consequence: CRA will reassess, deny losses.
Frequently Asked Questions
General Questions
Q: Do I have to pay taxes on crypto if I didn't cash out to CAD?
A: Yes. Trading crypto-to-crypto is a taxable disposition of the first crypto.
Q: Can I hold Bitcoin in my TFSA?
A: Not directly. You can hold Bitcoin ETFs or crypto stocks, but not actual cryptocurrency.
Q: What if I lost crypto in a hack or scam?
A: Possibly deductible as a capital loss if you can prove ownership and loss. Must show reasonable steps to recover.
Q: Do I pay GST/HST on crypto?
A: No. CRA treats crypto transactions as barter (exempt from GST/HST).
Q: What's the superficial loss rule?
A: Can't claim a loss if you repurchase the same property within 30 days before or after the sale.
Trading and Investing
Q: How do I know if I'm a trader or investor?
A: CRA looks at frequency, holding period, knowledge, time spent. Most people are investors. If you day trade full-time, you're likely a trader.
Q: Can I use the superficial loss workaround (sell BTC, buy ETH)?
A: Yes. Buying a different cryptocurrency doesn't trigger the superficial loss rule.
Q: Do I need to report every single transaction?
A: You must calculate gains/losses for each disposition, but you can summarize on Schedule 3. Keep detailed records for CRA.
Q: What if I have thousands of transactions?
A: Use crypto tax software (Koinly, CoinTracking). CRA accepts summarized reports if you keep detailed backup.
Income and Mining
Q: When are staking rewards taxed?
A: When you receive them (dominion and control). Income = fair market value at receipt.
Q: Can I deduct mining expenses?
A: Yes, if you're carrying on a business. Must report on T2125. Deduct electricity, equipment, internet, etc.
Q: Are airdrops taxable?
A: Depends. If you provided services (social media, KYC), yes. True "gifts" may not be income until sold (gray area).
Q: What about DeFi yield farming?
A: Rewards are income when received. Later sales are capital gains/losses.
Reporting
Q: What forms do I need?
A: Schedule 3 (capital gains), T1135 (if foreign property >$100k), T2125 (if business income).
Q: Do I need to report if I only bought and held?
A: No immediate tax, but keep records. Some argue you should still disclose holdings.
Q: What if exchanges don't give me tax documents?
A: You're responsible for calculating taxes regardless. Export transaction history and use tax software.
Q: How far back can CRA audit?
A: Normally 3 years. Up to 6 years for unreported income. No limit for fraud.
International
Q: I'm a Canadian living abroad. Do I owe Canadian crypto tax?
A: Only if you're still a Canadian resident for tax purposes. Depends on residential ties.
Q: Do US exchanges report to CRA?
A: Not directly, but CRA can request info through tax treaties. Assume CRA knows.
Q: What if I trade on foreign exchanges?
A: Same tax rules apply. File T1135 if total foreign property >$100k.
Need More Help?
Find a Crypto Tax Professional
Certified accountants specializing in crypto:
- CPA Canada Directory
- Crypto Tax Canada - Specialists
- Local CPAs with crypto experience
Cost: $500 - $3,000+ depending on complexity
CRA Resources
Official guidance:
- CRA Cryptocurrency Guide
- CRA Phone: 1-800-959-8281
Software Tools
Canadian crypto tax software:
- Koinly - Best overall
- CoinTracking - Detailed reports
- Accointing - Good for DeFi
Related Guides
Other countries:
About This Guide
Last updated: January 9, 2025
Disclaimer: This guide is for educational purposes only. Tax laws are complex and change frequently. Consult a qualified Canadian tax professional for advice specific to your situation.
Share This Guide
Help other Canadian crypto investors:
Stay updated: Subscribe to our newsletter