Cryptocurrency is officially taxable in Canada—and understanding your obligations is essential for every investor, trader, or business owner. With new changes introduced in the 2024 Federal Budget affecting capital gains over $250,000, staying compliant with Canada Revenue Agency (CRA) rules has never been more important. This guide breaks down everything you need to know about crypto taxation in Canada for 2025, from capital gains and income tax to staking, mining, NFTs, and how to report accurately.
How Is Cryptocurrency Taxed in Canada?
The Canada Revenue Agency (CRA) treats cryptocurrency as a commodity, not legal tender. This means crypto transactions are subject to either capital gains tax or business income tax, depending on how they’re conducted.
When you dispose of cryptocurrency—by selling, trading, spending, or gifting—you may trigger a taxable event. Only 50% of capital gains were traditionally included in taxable income. However, recent updates have altered this structure significantly.
👉 Discover how to calculate your crypto tax liability with ease and stay audit-ready in 2025.
Key Changes from the 2024 Federal Budget
On April 16, 2024, Finance Minister Chrystia Freeland announced an increase in the capital gains inclusion rate for gains exceeding $250,000:
- First $250,000 of capital gains: 50% inclusion rate
- Gains above $250,000: 66.67% inclusion rate
For example:
- You bought Bitcoin for $10,000 and sold it for $500,000 → $490,000 profit
- First $250,000 taxed at 50% = $125,000 taxable
- Remaining $240,000 taxed at 66.67% ≈ $160,000 taxable
- Total taxable amount: $285,000, taxed at your marginal rate
This change primarily impacts high-volume traders and investors but underscores the importance of accurate recordkeeping and tax planning.
What Crypto Transactions Are Taxable?
Any disposition of cryptocurrency triggers a potential tax obligation. Common taxable events include:
- Selling crypto for CAD or USD
- Trading one cryptocurrency for another
- Using crypto to pay for goods or services
- Gifting or donating crypto
Let’s explore each scenario.
Selling Crypto for Fiat Currency
Selling digital assets for traditional currency is a clear taxable event. You must report the capital gain or loss based on the difference between your purchase price (adjusted cost basis) and the selling price.
Example:
- Buy 1 BTC at $30,000
- Sell 1 BTC at $60,000
- Capital gain: $30,000 → $15,000 (or more) included in income depending on total annual gains
Holding crypto without selling incurs no immediate tax.
Trading One Crypto for Another
Swapping Bitcoin for Ethereum counts as two transactions: selling BTC and buying ETH. Even though no fiat is involved, you still realize a capital gain or loss on the disposed asset.
Example:
- Buy BTC at $20,000
- Trade BTC when value is $25,000 → $5,000 capital gain
- This gain is taxable even if you reinvest into another crypto
All such trades must be tracked in Canadian dollars at the time of transaction.
Using Crypto to Pay for Goods or Services
Because crypto isn’t considered currency in Canada, using it to make purchases constitutes a barter transaction. Both parties may face tax implications:
- Payer: Disposes of crypto → potential capital gain/loss
- Receiver: Receives commodity → reports fair market value as business income
Example:
- Buy 0.01 BTC for $100
- Next day, use it to buy coffee when BTC is worth $110
- You’ve made a $10 capital gain → must report
Keep detailed records of all values in CAD at time of transaction.
Gifting or Donating Crypto
Giving crypto to someone else is a disposition. The giver may incur capital gains if the value increased since acquisition. The recipient does not pay tax upon receipt but will be liable when they later sell or trade it.
Losses can be claimed only if the gift was made at fair market value or sold below cost.
Business Income vs. Capital Gains: How Are They Different?
Your tax treatment depends on whether the CRA views your activity as investment (capital gains) or trading/business (business income).
| Factor | Capital Gains | Business Income |
|---|---|---|
| Intent | Long-term investment | Profit-making through frequent activity |
| Frequency | Occasional trades | Regular/day trading |
| Organization | Personal portfolio | Business plan, records, marketing |
| History | Passive holding | Active trading strategy |
Business income is 100% taxable, while only a portion of capital gains is included under current rules.
If you're actively trading, running a mining operation, or operating a crypto-based business, expect to report earnings as business income.
Taxes on Crypto Mining and Staking
Mining
- Hobby mining: No tax until you sell; then capital gains apply
- Commercial mining: Revenue treated as business income; expenses deductible
Equipment costs, electricity, and hosting fees may reduce taxable income if mining is classified as a business.
Staking
The CRA hasn't issued specific staking guidance, but rewards are generally treated as income at fair market value when received.
Example:
- You stake ETH and earn 0.5 ETH worth $1,500 at receipt
- Report $1,500 as income → taxed at marginal rate
- Later sale of staked ETH triggers capital gain/loss based on new cost basis
Yield farming and liquidity pool rewards follow similar principles.
Are NFTs Taxable in Canada?
Yes. Non-fungible tokens (NFTs) are treated like cryptocurrencies for tax purposes.
Taxable events include:
- Selling an NFT for profit → capital gain
- Trading one NFT for another → disposition → potential gain/loss
- Using NFTs as payment → barter transaction
- Staking NFTs for rewards → income upon receipt
Collectors and creators alike must track acquisition cost and sale value in CAD.
How to Report Crypto Taxes in Canada
Use these forms based on your situation:
- Capital Gains/Losses: Report on Schedule 3 of your personal tax return
- Business Income: File Form T2125
You must calculate:
- Adjusted cost base (average purchase price)
- Fair market value at time of disposal
- Gain/loss per transaction
Can You Invest in Crypto Tax-Free?
While you can't hold direct cryptocurrency in a Tax-Free Savings Account (TFSA), you can invest in crypto ETFs that trade on Canadian exchanges:
Popular options:
- Purpose Bitcoin ETF (BTCC)
- Evolve Bitcoin ETF (EBIT)
- CI Galaxy Bitcoin ETF (BTCX)
- 3iQ Bitcoin ETF (BTCQ)
- Fidelity Advantage Bitcoin ETF (FBTC)
These ETFs offer exposure to crypto prices without managing private keys—but come with management fees and no direct ownership.
Profits within a TFSA are completely tax-free.
GST/HST Implications for Crypto Businesses
If you run a business accepting crypto:
- Revenue must be reported in CAD at fair market value
- If annual revenue exceeds $30,000, you must register for and collect GST/HST
However, most cryptocurrencies qualify as virtual payment instruments, which are exempt from GST/HST under CRA rules. So while you report income, you typically don’t charge GST/HST on crypto payments—unless providing non-financial goods/services.
Frequently Asked Questions (FAQ)
Do I need to report crypto if I didn’t sell?
No. Simply buying and holding cryptocurrency does not trigger a tax event. Reporting is required only when you dispose of it through sale, trade, spend, or gift.
How does the CRA track cryptocurrency?
Blockchain is public and immutable. Exchanges collect personal information due to KYC regulations. The CRA can request data from platforms and trace wallet addresses to individuals—especially for transactions over $10,000.
Can I deduct crypto losses?
Yes. Capital losses can offset capital gains in the same year. Unused losses can be carried back up to three years or forward indefinitely.
Is transferring crypto between my own wallets taxable?
No. Moving crypto between wallets you own is not a disposition and does not trigger tax. However, ensure proper documentation exists to prove both wallets belong to you.
What records should I keep?
The CRA recommends keeping records for at least six years:
- Dates of all transactions
- CAD value at time of transaction
- Wallet addresses
- Receipts and trade confirmations
- Records of mining/staking rewards
- Details of exchange accounts used
Can I get audited for crypto taxes?
Yes. The CRA conducts audits targeting unreported crypto income. Penalties include:
- 50% penalty on gross negligence
- Up to 200% penalty for tax evasion
- Potential criminal charges and jail time
Accurate reporting and third-party verification help protect against audit risks.
How to Calculate Your Crypto Taxes Accurately
Manual tracking becomes impractical with multiple trades across exchanges and wallets. Use automated tools to:
- Import transactions via API or CSV
- Calculate adjusted cost basis
- Identify gains/losses per trade
- Generate CRA-compliant reports
👉 Generate precise tax reports in minutes and stay fully compliant with Canadian regulations.
Final Thoughts: Stay Compliant and Confident
Crypto taxation in Canada doesn’t have to be overwhelming. Whether you're a long-term holder, active trader, miner, or business owner, clarity comes from understanding the rules:
- Track every disposition
- Know the difference between capital gains and business income
- Leverage ETFs for tax-efficient exposure
- Maintain detailed records
- Use reliable tools to automate calculations
With the 2024 changes increasing scrutiny on larger gains, now is the time to get organized. By staying informed and proactive, you can enjoy the benefits of digital assets while remaining fully compliant with Canadian tax law.
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