A common question among Canadians is: Is cryptocurrency taxed in Canada? The answer is yes. Various crypto transactions are subject to taxation. This guide covers everything you need to know about cryptocurrency taxes in Canada for 2025.
Understanding Crypto Taxation in Canada
Cryptocurrency gains are classified as capital gains under Canadian tax law. Historically, only 50% of capital gains were taxable at your marginal tax rate. However, the 2024 Federal Budget introduced significant changes:
- Capital Gains Inclusion Rate Increase: For gains exceeding $250,000, the inclusion rate rose to 66.67% (effective April 16, 2024).
Example Calculation:
If you bought Bitcoin at $10,000** and sold it for **$500,000:
- Profit = $490,000
- First **$250,000**: Taxed at **50%** ($125,000 taxable)
- Remaining **$240,000**: Taxed at **66.67%** ($160,000 taxable)
- Total taxable amount: $285,000 (charged at your marginal rate).
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Taxable Crypto Transactions in Canada
The Canada Revenue Agency (CRA) treats cryptocurrency as a commodity, meaning profits from these activities are taxable:
- Selling Crypto for Fiat: Report capital gains/losses.
- Trading Crypto for Crypto: Taxable as a disposition (e.g., swapping BTC for ETH).
- Using Crypto for Goods/Services: Barter transaction rules apply.
- Gifting Crypto: May trigger capital gains tax for the giver.
| Transaction Type | Tax Implications |
|---|---|
| Sell for CAD | Capital gains/losses |
| Crypto-to-crypto trade | Capital gains/losses |
| Purchase with crypto | Barter transaction (FMV at time of use) |
| Gifting | Capital gains/losses for giver |
Business Income vs. Capital Gains
When to Report as Business Income:
- Regular trading (e.g., day trading).
- Operating a crypto-related business (e.g., mining, exchanges).
- Intent to profit with business-like activity (e.g., business plan).
When to Report as Capital Gains:
- Holding crypto as a long-term investment.
- Infrequent trading.
Key Change: Post-2024 Budget, capital gains over $250,000 are taxed at 66.67%.
Special Cases: Mining and Staking
Mining:
- Hobby mining (no sales): Not taxable.
- Profit-driven mining: Business income.
- Staking Rewards: Treated as income (taxed at marginal rate).
Reporting Crypto Taxes
- Track All Transactions: Dates, CAD value, wallet addresses.
- Use Tools Like Koinly: Automatically calculates gains/losses.
File with CRA:
- Business income: Form T2125.
- Capital gains: Schedule 3.
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GST/HST on Cryptocurrency
- Most crypto transactions (e.g., trading) are GST/HST-exempt (classified as financial services).
- Exception: Businesses selling goods/services for crypto must charge GST/HST if revenue exceeds $30,000/year.
Tax-Free Crypto Investing
- TFSA: Invest in crypto ETFs (e.g., Purpose Bitcoin ETF).
- Note: Direct crypto holdings aren’t TFSA-eligible.
FAQs
1. Are NFTs taxable?
Yes, treated like crypto (capital gains on sales).
2. Can the CRA track crypto?
Yes—exchanges report transactions over $10,000.
3. What if I don’t report crypto?
Penalties include fines up to 200% of owed taxes or jail time.
4. How to calculate capital gains?
Use adjusted cost basis (average purchase price).
5. Is crypto-to-crypto trading taxable?
Yes—every trade triggers capital gains/losses.
Final Tips
- Keep records for 6+ years.
- Use tax software (e.g., Koinly) to simplify reporting.
- Consult a CPA for complex cases.
For official CRA guidelines, visit Canada.ca.
Disclaimer: This article is informational; consult a tax professional for personalized advice.
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