Is cryptocurrency taxable in Canada?<\/h3>
Yes, crypto is taxed in Canada. The CRA treats crypto as a commodity for tax purposes, so it\u2019s taxed similarly to stocks or other investments.<\/p>
This means crypto can be treated as income or as a capital gain, but your tax obligations vary depending on whether you\u2019re a casual crypto buyer or if the profits you make from crypto are classified as business income.<\/p>
You don\u2019t need to pay tax if you simply hold crypto or buy cryptocurrency with Canadian dollars. Instead, cryptocurrency becomes taxable when you dispose of it. This happens when you:<\/p>
- Sell or gift cryptocurrency. <\/strong>If you buy 1 Bitcoin for $100,000, then sell it later for $125,000, you\u2019ve made a taxable gain of $25,000.<\/li>
- Trade or exchange cryptocurrency for another cryptocurrency.<\/strong> You expect the price of Bitcoin to fall, so you use your Bitcoin holdings to purchase Ethereum. Even though no government-recognized currency like CAD or USD is used in the exchange, the amount you earn is still subject to tax law.<\/li>
- Convert cryptocurrency to a government-issued currency like Canadian dollars.<\/strong> If you cash in your Bitcoin holdings for $100,000 and transfer the funds to your bank account, the dollar value of your crypto at the time you trade it is subject to tax law.<\/li>
- Buy goods or services with cryptocurrency.<\/strong> Because cryptocurrency isn\u2019t recognized as legal tender, the CRA views a transaction like this as \u201cbartering\u201d.<\/li>
- Transfer ownership. <\/strong>If you gift your crypto or donate it, the CRA treats it as a disposition at fair market value, which may result in a capital gain or loss.<\/li><\/ul>
How is crypto taxed in Canada?<\/h3>
The type of tax you\u2019ll pay depends on whether your crypto earnings are classified as business income or capital gains.<\/p>
If your crypto earnings don\u2019t fall within the scope of \u201cbusiness income\u201d, then you must treat these earnings as capital gains on your personal income tax return.<\/p>
- Capital gains: <\/strong>Occur when you earn money from selling or exchanging crypto that has increased in value.<\/li>
- Capital loss: <\/strong>Occurs when you lose money from selling or exchanging crypto that has gone down in value. Capital losses can be used to offset capital gains, reducing the amount of tax you owe. They cannot generally be used to offset regular employment or business income.<\/li>
- Business income:<\/strong> If your crypto activity is considered business income, then 100% of your net profit is taxable and capital gains inclusion rates don\u2019t apply.<\/li><\/ul>
How crypto gains tax in Canada works<\/h3>
In Canada, you\u2019re only taxed on the portion of capital gains included in your income, which is determined by the capital gains inclusion rate.<\/p>
As of January 1, 2026, the capital gains inclusion rates for individuals<\/strong> are:<\/p>
- 50% of annual realized capital gains up to $250,000 would be included in taxable income.<\/li>
- 66.67% of annual realized capital gains above $250,000 would be included in taxable income.<\/li><\/ul>
For corporations and trusts:<\/strong><\/p>
- 66.67% of all realized capital gains would be included in taxable income, regardless of the amount.<\/li><\/ul>
This means that half or two-thirds of the money you earn from selling an asset is taxed, and the rest is yours to keep tax-free.<\/p>
For example, if you buy or otherwise obtain 1 BTC worth $100,000, then sell or spend it when it\u2019s valued at $110,000, you\u2019ve realized a capital gain of $10,000. You would only have to pay income tax on 50% of this, or $5,000.<\/p>
How to calculate your capital gain or loss<\/h3>
To calculate your capital gain or loss, follow these steps:<\/p>
- Determine the adjusted cost base (ACB) of your crypto assets.<\/strong> This is what you paid to buy your cryptocurrency, plus related costs such as transaction fees and commissions.<\/li>
- Subtract your ACB from the amount you disposed it for.<\/strong> Use the fair market value in Canadian dollars at the time you sold, traded or spent the crypto.<\/li>
- Apply the inclusion rate.<\/strong> Which is 50% for gains up to $250,000 and 66.67% for gains above $250,000 for individuals or 66.67% for corporations.<\/li><\/ol>
This amount counts as part of your income and will be taxed accordingly. Remember that you\u2019re only taxed on crypto assets you dispose of. So, when calculating capital gains, don\u2019t factor in the buying or selling costs of any cryptocurrency you\u2019re holding onto.<\/p>
Example: Calculating capital gains<\/h4>
Let\u2019s say you buy $25,000 worth of Bitcoin and pay a transaction fee of $20. To get your adjusted cost base, you would add those expenses together. This is how it breaks down:<\/p>
Step 1. $25,000 (original purchase price) + $20 (fees) = $25,020 (adjusted cost base)<\/strong>
Let\u2019s assume the value of Bitcoin goes up, and you sell your BTC for $36,000. Your total capital gain is the selling price minus the adjusted cost base of your Bitcoin. Your taxable capital gain is half that amount. This is what it looks like:<\/p>Step 2. $36,000 (selling price) \u2013 $25,020 (adjusted cost base) = $10,980 (total capital gain)<\/strong><\/p>
Step 3. $10,980 (total capital gain) \u00f7 2 = $5,490 (taxable capital gain)<\/strong>
Your taxable profit on the sale is $5,490, which would be added to the rest of your income and taxed accordingly by the CRA. The other half of your capital gain \u2014 also $5,490 \u2014 can be pocketed tax-free!<\/p><\/div><\/article>How to report cryptocurrency on taxes<\/h3>
You\u2019ll need to report crypto capital gains or losses on your income tax return. This can be done in the \u201cBonds, debentures, promissory notes, crypto-assets, and other similar properties\u201d section on T1 Schedule 3 \u2013 Capital Gains (or Losses)<\/a>.<\/p>
Get help from crypto tax software<\/h3>
Tax law can be complicated and confusing, and cryptocurrency taxation rules are still evolving. We highly recommend getting help from a trained tax professional to make sure you stay up-to-date and compliant with all the CRA\u2019s rules. Be aware that not all tax professionals are familiar with handling crypto, so you should narrow your search to those with experience in digital assets.<\/p>
Research and compare the best crypto tax software to help you keep on top of your transactions in the lead up to tax time. Check out the table below for crypto tax software options.<\/p>
\n\n <\/div>\n\n\n<\/div>4 of 4 results<\/span><\/small><\/div><\/div><\/div> - Subtract your ACB from the amount you disposed it for.<\/strong> Use the fair market value in Canadian dollars at the time you sold, traded or spent the crypto.<\/li>
- Determine the adjusted cost base (ACB) of your crypto assets.<\/strong> This is what you paid to buy your cryptocurrency, plus related costs such as transaction fees and commissions.<\/li>
- 66.67% of all realized capital gains would be included in taxable income, regardless of the amount.<\/li><\/ul>
- Capital loss: <\/strong>Occurs when you lose money from selling or exchanging crypto that has gone down in value. Capital losses can be used to offset capital gains, reducing the amount of tax you owe. They cannot generally be used to offset regular employment or business income.<\/li>
- Trade or exchange cryptocurrency for another cryptocurrency.<\/strong> You expect the price of Bitcoin to fall, so you use your Bitcoin holdings to purchase Ethereum. Even though no government-recognized currency like CAD or USD is used in the exchange, the amount you earn is still subject to tax law.<\/li>