The CRA treats cryptocurrency as a commodity — and every sale, trade, or exchange is a taxable event. If you own Bitcoin, Ethereum, or any other crypto, here is what you need to know about reporting it on your tax return.
How crypto is taxed in Canada
| Event | Taxable? | Tax Treatment |
|---|---|---|
| Selling crypto for CAD/USD | Yes | Capital gain or loss |
| Trading one crypto for another | Yes | Capital gain or loss |
| Using crypto to buy goods/services | Yes | Capital gain or loss |
| Receiving crypto as payment | Yes | Income at fair market value |
| Mining crypto | Yes | Business income or capital gain |
| Staking rewards | Yes | Income at fair market value received |
| Airdrops | Yes | Income at fair market value received |
| Gifting crypto | Yes | Deemed disposition at fair market value |
| Donating crypto to charity | Possibly exempt | May qualify for charitable donation credit |
| Transferring between your own wallets | No | No disposition |
| Buying crypto with CAD | No | Not a taxable event (your ACB is the cost) |
Capital gains vs business income
The CRA determines whether your crypto gains are capital gains or business income based on your activity:
| Factor | Capital Gains (50% taxable) | Business Income (100% taxable) |
|---|---|---|
| Trading frequency | Occasional, infrequent | Frequent, regular |
| Holding period | Long-term (months/years) | Short-term (days/weeks) |
| Intent | Investment / store of value | Profit from quick trades |
| Knowledge | Casual investor | Professional or advanced knowledge |
| Time spent | Minimal | Significant time dedicated |
| Leverage | None | Using margin or derivatives |
Most individual investors who buy and hold crypto will have their gains treated as capital gains. Active day traders are more likely to be treated as business income.
How to calculate your capital gain
Capital gain = Proceeds of disposition − Adjusted cost base (ACB) − Transaction fees
Example
- Bought 1 BTC in January 2024 for $55,000 (your ACB)
- Sold 1 BTC in March 2026 for $85,000
- Transaction fees: $50
Capital gain: $85,000 − $55,000 − $50 = $29,950 Taxable capital gain (50%): $14,975 Tax at 40% marginal rate: $5,990
Adjusted cost base (ACB) tracking
If you bought crypto at different times and prices, you must calculate your ACB using the average cost method:
Example with multiple buys
| Date | Action | BTC | Price | Total Cost |
|---|---|---|---|---|
| Jan 2024 | Buy | 0.5 | $55,000 | $27,500 |
| Jun 2024 | Buy | 0.3 | $60,000 | $18,000 |
| Dec 2024 | Buy | 0.2 | $50,000 | $10,000 |
| Total | 1.0 | $55,500 |
Your ACB per BTC is $55,500 ÷ 1.0 = $55,500
If you sell 0.5 BTC for $45,000:
- ACB of 0.5 BTC: $27,750
- Capital gain: $45,000 − $27,750 = $17,250
Mining and staking
Mining
- If mining is a hobby: report as business income at the fair market value when mined
- If mining is a business: report as business income, and you can deduct expenses (electricity, equipment)
- When you later sell the mined crypto: capital gain/loss (using the fair market value at time of mining as your ACB)
Staking rewards
- Staking rewards are generally treated as income at the fair market value when received
- When you sell staked crypto: capital gain/loss calculated from the ACB (fair market value at receipt)
How to report crypto on your tax return
- Track all transactions — Use crypto tax software (Koinly, CoinTracker, etc.) or a spreadsheet
- Calculate gains and losses — For each disposition, calculate the capital gain or loss
- Report on Schedule 3 — Enter total capital gains and losses on Schedule 3 of your T1 return
- Business income on T2125 — If treated as business income, report on Form T2125
- Keep records — The CRA requires you to keep records of all crypto transactions for at least 6 years
CRA enforcement
The CRA is actively tracking cryptocurrency transactions. Canadian exchanges (like Wealthsimple Crypto) report to the CRA, and the CRA participates in international information-sharing agreements for foreign exchanges. Not reporting crypto income is tax evasion and can result in penalties, interest, and criminal charges.
Bottom line
Every time you sell, trade, or spend crypto in Canada, it is a taxable event. Track your transactions carefully, calculate your ACB accurately, and report everything on your tax return. Use our capital gains tax calculator to estimate the tax on your crypto gains.
Crypto-to-crypto trades
Swapping one cryptocurrency for another (e.g., BTC → ETH) is a taxable disposition. Calculate the gain as follows:
| Step | Action |
|---|---|
| 1 | Determine the fair market value (FMV) in CAD of the crypto you disposed of at the time of the trade |
| 2 | Subtract the ACB of the disposed crypto |
| 3 | The difference is your capital gain or loss |
| 4 | The new crypto you received gets an ACB equal to its FMV at the time of the trade |
Airdrops
| Event | Tax treatment |
|---|---|
| Receive airdrop with measurable value | Income at FMV when received |
| Receive airdrop with no measurable value | ACB may be $0 — full amount is gain when eventually sold |
| Later sell airdropped crypto | Capital gain or loss calculated from the ACB (FMV at receipt) |
DeFi transactions
| Activity | Tax consideration |
|---|---|
| Yield farming | Income when rewards received + capital gain/loss on disposal |
| Liquidity pool entry/exit | May trigger a taxable disposition |
| Borrowing crypto | Generally not taxable |
| Lending crypto (receiving interest) | Interest is taxable income |
DeFi creates many taxable events — use crypto tax software to track positions accurately.
Crypto losses
| Rule | Details |
|---|---|
| Offset capital gains | Yes — crypto losses reduce other capital gains |
| Offset regular income | No — capital losses cannot offset employment or business income |
| Carry back | Up to 3 previous tax years |
| Carry forward | Indefinitely |
| Superficial loss rule | If you repurchase the same crypto within 30 days, the loss is denied |
Tax planning tips
| Strategy | Benefit |
|---|---|
| Tax-loss harvesting | Sell losing positions to offset gains, then reinvest after 30 days |
| Timing dispositions | Defer sales to a lower-income year if possible |
| Hold in TFSA (ETFs only) | Crypto ETFs held in a TFSA grow tax-free |
| Donate to registered charity | May avoid capital gains tax on donated crypto |
| What not to do | Risk |
|---|---|
| Not reporting | Penalties, interest, potential prosecution |
| Claiming losses on assets still held | Superficial loss rules apply |
| Incorrect classification (capital vs business) | CRA reassessment |