If you're uncertain about how cryptocurrency is taxed in Canada or curious about how much tax you'll pay on your crypto transactions, you're not alone. The Canada Revenue Agency (CRA) has issued guidelines on crypto taxation, but the details can still be unclear. Our updated Tax Guide for Canada 2025 covers essential information on crypto taxes, including how to calculate your crypto taxes, report your earnings to the CRA, and even how to reduce your tax liability before the April 30 filing deadline. Let's dive into the details!
Yes, cryptocurrency is subject to taxation in Canada. The CRA treats crypto as an asset, meaning you'll pay Income Tax on any gains from crypto sales or trades, as well as on additional crypto income, such as staking or being paid in crypto. Importantly, the CRA imposes taxes on half of any capital gains derived from cryptocurrency transactions.
The tax you owe on cryptocurrency transactions depends on the nature of the transaction and the amount involved. If your crypto transaction is categorized as income, you’ll pay tax at your regular federal and provincial rates. For transactions classified as capital gains, you’ll only pay taxes on half of the profit at the same federal and provincial tax rates. This can vary depending on your personal income level, but for the most accurate calculation, it’s advisable to use a crypto tax calculator.
There is some good news for crypto enthusiasts. Certain crypto transactions are tax-free in Canada. These include when you buy crypto with fiat currency, hold (or "HODL") your crypto, transfer crypto between your own wallets, receive crypto as a gift, or create a Decentralized Autonomous Organization (DAO). These activities don’t incur taxes, which is a relief for many investors.
Yes, the CRA has the ability to track your crypto investments. If you’re thinking about not declaring your crypto income or gains, you should reconsider. The CRA has been working closely with crypto exchanges to share customer information and track Canadian crypto investors. Starting in 2022, Canadian money services businesses are required to report transactions over $10,000 to the CRA. This means that if you send large sums of money to a crypto exchange, the CRA will be informed.
Additionally, exchanges like Tax Coin and other platforms may be obligated to link your personal ID with your account, making it easier for the CRA to track your activities. It’s important to note that this is not limited to just Coinsquare but likely involves other major exchanges like Coinbase, CoinSmart, and Crypto.com.
Cryptocurrency is classified by the CRA as a commodity, not as fiat currency. As a result, it’s subject to either Income Tax or Capital Gains Tax. If your crypto is taxed as income, you’ll be required to pay taxes on the full transaction amount. However, if your crypto is taxed as a capital gain, you’ll only pay taxes on half of the profit you made from the transaction.
The CRA determines whether your crypto earnings are classified as business income or capital gains on a case-by-case basis. There are a few general indicators to help determine which category your transactions fall into. If you are actively trading crypto, regularly buying and selling, or promoting crypto products or services, the CRA is more likely to classify your earnings as business income. Conversely, if your activities are more passive and centered on long-term gains, you may be taxed under capital gains.
For example, the CRA highlights that an investor who buys and sells crypto frequently and generates significant profits through active trading is more likely to be classified as earning business income. The more active you are in crypto trading, the greater the likelihood that your earnings will be considered business income rather than capital gains.
A disposition of crypto includes any of the following actions:
However, it’s important to note that you only pay Capital Gains Tax on the profit made from these transactions, not on the total amount. This profit is referred to as a capital gain.
The great news for Canadian crypto investors is that you only pay taxes on half of your net capital gain each year. This significantly reduces your taxable income. To understand how this works, you can use a tax crypto calculator to help estimate your crypto tax obligations and ensure you’re getting the most accurate results.
Canada doesn’t have a separate Capital Gains Tax rate for crypto, and there are no short-term or long-term capital gains distinctions. Instead, crypto capital gains are taxed according to your Federal and Provincial Income Tax rates. Keep in mind, you’re only taxed on half of your capital gains. Below is an overview of the Federal tax brackets for the 2024 and 2025 fiscal years:
To find out the Provincial Income Tax Rates for your area, check out our guide on Canada’s crypto tax rates.
Capital losses from crypto transactions can be a useful tool to reduce your overall tax liability. While you won’t pay any Capital Gains Tax on losses, you can use them to offset any capital gains you’ve made in the same tax year. However, keep in mind that the 50% rule applies here too. You can only use half of your net capital loss to reduce your taxes in the current year. If you have leftover losses, they can be carried forward to offset gains in future years.
The CRA has not issued specific guidelines about claiming lost or stolen crypto as a capital loss. However, as crypto is classified as a capital property in Canada, there’s a chance you could claim a capital loss for stolen crypto. To find out more, refer to our lost and stolen crypto guide, which provides deeper insights on this topic.
When you sell, swap, spend, or gift crypto, you’ll have either a capital gain or a capital loss based on the difference in value between when you acquired the crypto and when you disposed of it.
Here’s how you can calculate your crypto capital gains:
Using the adjusted cost basis method, you can track any costs related to acquiring, selling, or exchanging your crypto. This includes transaction fees, exchange fees, and gas fees for blockchain transactions.
For example, if you received crypto as a gift or through an airdrop, your adjusted cost basis would be zero, meaning that any proceeds from a sale or exchange would be considered capital gain and subject to tax.
Example Calculation of Crypto Capital Gains
Let’s walk through a simple example to help illustrate the calculation:
This is how much you would owe on your crypto profits for the year.
Canada uses the adjusted cost basis method for calculating crypto capital gains and losses. This means you must carefully track the costs associated with acquiring your crypto assets. If you have multiple identical assets, the CRA suggests using the average cost basis method.
To prevent wash sales, the CRA enforces the superficial loss rule. This rule applies when you acquire identical cryptocurrency within 30 days before or after selling the same crypto. In this case, you cannot use these losses to offset your capital gains.
There are several tax benefits that Canadian crypto investors can take advantage of, including:
However, it’s important to let the CRA calculate the applicable discounts, as they will review all your asset classes and adjust for any relevant credits on your behalf.
After exploring capital gains, it's time to dive into crypto income tax, which applies to various transactions considered income by the Canada Revenue Agency (CRA). Essentially, if you're earning cryptocurrency, whether through payment, mining, or DeFi activities, these transactions are subject to income tax rather than capital gains tax.
The following crypto activities may be treated as taxable income in Canada:
If you engage in crypto trading frequently and at a significant scale, your profits might also fall under business income rather than capital gains.
Decentralized finance (DeFi) offers innovative ways to earn from crypto, and these are often treated as business income. Some examples include:
Since the CRA considers activities done for commercial purposes as business income, most DeFi activities likely fall into this category. To ensure compliance, consult a crypto-savvy tax professional.
Unlike capital gains, where only 50% of the profit is taxable, crypto income is fully subject to income tax. Here's how to calculate it:
Total Tax Rate = 28.2%
Crypto Income Tax = 28.2% of $10,000 = $2,820
Understanding how different crypto activities are taxed can help you stay compliant while planning your financial strategies.
If you’re simply purchasing cryptocurrency with CAD, you’re in luck—it’s tax-free. However, keeping detailed records is essential, as you’ll need to calculate gains or losses accurately when you later dispose of the crypto.
Planning to "HODL" your crypto until it reaches the moon? Good news—you won’t pay any tax on unrealized gains. Taxes only apply when you sell, trade, or otherwise dispose of your crypto.
Exchanging one cryptocurrency for another is considered a "disposition" under CRA rules and is subject to capital gains tax. For example, if you trade Bitcoin (BTC) for Ethereum (ETH), the CRA requires you to calculate any gain or loss from disposing of the BTC. The cost basis of your BTC, including fees, is subtracted from its fair market value on the day of the trade to determine your taxable gain or loss.
Even though stablecoins are designed to maintain a consistent value, they are treated like any other cryptocurrency by the CRA. If you use stablecoins to purchase other cryptocurrencies, any gains from the disposition of stablecoins are taxable. While the capital gains or losses are often negligible due to stablecoins’ price stability, you must still maintain accurate transaction records.
Let’s say Devin bought 1 ETH at $2,500, paying an additional $25 in fees, which brings his adjusted cost basis to $2,525. Later, he sells that ETH for $5,000. Subtracting his cost basis, Devin realizes a capital gain of $2,475.
Devin earns $80,000 annually, placing him in the 20.5% federal tax bracket. He lives in Ontario, where his provincial tax rate is 9.15%. Combined, his tax rate is 29.65%.
However, only 50% of his capital gain is taxable, reducing the amount to $1,237.50. Applying his tax rate, Devin owes $366.92 in capital gains tax.
One of the most important aspects of managing crypto taxes in Canada is maintaining detailed records of all transactions. Whether you’re buying, trading, or earning crypto, keeping a comprehensive account of your cost basis and FMV at the time of each transaction ensures accurate tax reporting.
Using a tax crypto calculator can help streamline the process of tracking and calculating your taxable income or gains. Many platforms integrate directly with popular exchanges, making it easier to manage your tax obligations.
Transferring cryptocurrency between your own wallets or exchanges does not incur taxes in Canada. The Canada Revenue Agency (CRA) doesn’t consider these transactions as disposals, which means they are tax-free. However, nuances such as transfer fees or movements involving liquidity pools can have specific tax implications. Let’s break this down and see how tools like a tax crypto calculator can streamline the process.
If you’re simply moving cryptocurrency between your wallets, it’s entirely tax-free. The CRA sees no change in ownership during such transfers, which exempts them from taxation. That said, it’s vital to maintain accurate records of these movements. Should the CRA conduct an audit, you’ll need to demonstrate the nature of the transfers and the absence of disposals.
While the act of transferring crypto itself is not taxed, the fees associated with it can be a different story.
For instance, if you transfer Ethereum (ETH) and pay a fee of 0.005 ETH, the CRA requires you to calculate the fair market value (FMV) of the fee at the time of the transfer. Any gain in the asset’s value since you acquired it will be taxed.
Imagine you purchased 1 ETH for $3,000. You later transfer it to another wallet, incurring a fee of 0.005 ETH when ETH’s value is still $3,000. Since the price hasn’t changed, your capital gain on the fee is zero, but the CRA still requires you to report this as a disposition.
Manually calculating these taxes can be tedious, but platforms offering a tax crypto calculator simplify this process by automatically categorizing transfer fees as disposals.
In decentralized finance (DeFi), transferring crypto into liquidity pools might seem like moving assets between wallets, but it’s not always that straightforward.
Many liquidity pools issue tokens representing your share in the pool. This token exchange is classified as a crypto-to-crypto swap, which is a taxable event.
If you remove your assets from the liquidity pool later, you might incur additional tax obligations depending on the value changes of the pool tokens and the original crypto.
While the Canada Revenue Agency (CRA) hasn’t issued explicit guidelines on taxing airdrops and forks, we can infer their treatment based on general principles for crypto taxation. Typically, receiving crypto through airdrops or forks isn’t taxable initially, but disposing of these assets later—whether by selling, swapping, or gifting—can trigger Capital Gains Tax.
In most cases, receiving an airdrop is not considered income for individual taxpayers. This means you won’t owe taxes immediately upon receipt of airdropped tokens. However, when you decide to sell, swap, or use these tokens, the CRA will tax the transaction as a disposition.
Imagine you receive 300 tokens from an airdrop with a fair market value (FMV) of $5 per token.
Since the cost basis is $0, your capital gain is $2,100, and this amount will need to be reported for tax purposes.
A hard fork occurs when a blockchain splits, resulting in new tokens being issued to existing holders. While the CRA doesn’t specifically address hard forks, their tax treatment generally aligns with how other crypto transactions are taxed.
Since the cost basis of the forked tokens is $0, the full value of the proceeds will be considered a capital gain.
In Canada, the tax rules surrounding crypto gifts, donations, and mining activities are nuanced. While crypto gifts are treated as asset dispositions, donations to registered charities and crypto mining have unique tax implications based on intent and usage.
When you gift cryptocurrency, the Canada Revenue Agency (CRA) treats this as a disposition of an asset. This means that you will need to calculate and pay Capital Gains Tax based on the increase in value of the gifted crypto from the time you acquired it to when you gave it away.
You purchased 10 tokens at $100 each. You later gift them when the FMV is $500 per token.
The recipient will report future gains based on $500 per token as their cost basis.
Donating cryptocurrency to a registered charity is considered a Gift-in-Kind, which has specific tax rules:
You bought 1 ETH for $600 and donated it to a charity when its FMV was $4,000.
Ensure donation receipts comply with CRA rules to avoid complications during audits.
The tax treatment of mined cryptocurrency depends on whether the CRA classifies your mining activities as a hobby or a business.
Once a valuation method is chosen, it must be applied consistently across tax years for accuracy and compliance.
Cryptocurrencies operating under proof-of-stake (PoS) mechanisms, like Ethereum, Polkadot, Solana, Avalanche, and Cardano, introduce specific tax considerations. PoS allows participants to secure the blockchain by staking their tokens, contributing to the creation of new tokens. This differs from DeFi staking, where tokens are loaned to protocols like AAVE to earn interest. Both types of staking, however, have tax implications that participants should understand.
When you earn crypto through staking in a PoS blockchain, the Canada Revenue Agency (CRA) typically views these earnings as income. As such, staking rewards are taxed as Income Tax based on the fair market value (FMV) of the tokens on the day they are received. Whether you immediately use or hold the rewards, their value at receipt determines the taxable amount.
Disposing of staking rewards—whether through selling, swapping, spending, or gifting—also triggers tax obligations under Capital Gains Tax. In this case, the FMV of the tokens at the time of receipt becomes their cost basis. When you dispose of these tokens, the difference between the FMV at the time of sale and the cost basis represents your capital gain or loss, which determines the tax owed.
Trading crypto through margin accounts, derivatives like Bitcoin futures, or Contracts for Differences (CFDs) also involves distinct tax treatments. The CRA differentiates between private investors and day traders, and this distinction affects how profits are taxed.
For private investors, profits from margin trading, derivatives, or CFDs are taxed as capital gains. Tax liability arises only when a position is closed, such as selling or liquidating assets. Opening a position does not generate immediate tax obligations. For instance, if you use margin trading to purchase crypto but hold your position, no taxes are owed until you sell. Additionally, expenses such as margin fees incurred during trading may be deducted, provided they directly relate to the activity.
Liquidation events, where collateral is sold to cover losses, are treated as dispositions for tax purposes. The gains or losses realized from these events contribute to your taxable capital gains, with only 50% of the profit being subject to tax.
If you trade at the scale and frequency of a day trader, the CRA considers your activities to be business-like, and profits are taxed as business income. Unlike capital gains, where only half of the profits are taxable, day traders pay Income Tax on 100% of their gains. This tax is applied when positions are closed, similar to individual investors, but the entire profit amount is included in taxable income at your applicable rate.
Understanding these tax implications is essential for compliance and effective financial planning. Regardless of your classification as an investor or trader, maintaining detailed records of transactions, fees, and positions can significantly simplify the process of calculating and reporting taxes.
The Canada Revenue Agency (CRA) has yet to release clear and specific guidance on the taxation of decentralized finance (DeFi) activities. While this leaves some uncertainty, it doesn't mean DeFi investments are tax-free. Instead, it means that the general tax framework applied to crypto assets in Canada must be used to infer how DeFi investments will be taxed. Generally, taxation in Canada depends on whether the activities are viewed as business income or capital gains.
DeFi investors typically engage in frequent, profit-driven activities, which often align more with business income rather than capital gains. This means that most DeFi investments are likely to be taxed as income, rather than capital gains. The key consideration is whether you're actively earning crypto or disposing of it, as the tax treatment changes based on the transaction type.
If you're earning income from DeFi activities, such as staking, yield farming, or liquidity provision, the CRA will likely categorize these earnings as income. This means they are subject to Income Tax based on the fair market value (FMV) of the tokens at the time you receive them.
If you borrow crypto via a DeFi protocol, there's generally no tax involved unless you receive liquidity provider (LP) tokens in exchange for the collateral you’ve staked. In that case, the tax treatment would be under Capital Gains Tax.
When paying interest on borrowed crypto in DeFi protocols, you would likely face Capital Gains Tax. However, if the loan is used for income-generating activities, such as purchasing assets that produce dividends or staking on another DeFi platform, the interest expense may be deductible against the income earned.
Selling or swapping NFTs incurs Capital Gains Tax if the NFT was previously purchased and then sold for a profit. If you created the NFT, however, the profits from the sale would be subject to Income Tax, as the creation and sale of an NFT is treated like any other product creation.
Activities such as staking on DeFi protocols, yield farming, or earning liquidity tokens are taxed under Income Tax because they involve earning crypto in exchange for providing liquidity or contributing to the network. However, when adding or removing liquidity from pools, you may be subject to Capital Gains Tax if tokens are exchanged in the process.
When participating in DeFi trading as an individual investor, any profits from trading activities, including margin trading and options, will likely be taxed under Capital Gains Tax. However, if you're seen as actively trading in a business-like manner (i.e., frequent, repetitive transactions), then the CRA may classify your profits as Income Tax. This distinction is made on a case-by-case basis, so it's advisable to consult a tax professional to clarify your specific situation.
For those engaging in DeFi transactions regularly and with the intention of making a profit, the CRA will likely classify those earnings as Income Tax. This differs from capital gains taxation, where only half of the profit is taxed.
The CRA has not issued explicit guidelines for NFT taxation, but NFTs are generally treated as digital assets similar to other cryptocurrencies. This means that NFTs are likely considered capital property under Canadian tax law and are subject to the same tax rules that apply to cryptocurrencies.
If you create and sell NFTs, this activity is treated as business income and is subject to Income Tax, just like the creation and sale of other products. Similarly, farming NFTs for staking rewards is likely to be taxed as Income Tax, similar to how staking rewards from DeFi are taxed.
For those who buy, sell, or swap NFTs, the tax treatment depends on whether they are considered traders or not. For individuals who are not deemed traders, the sale or exchange of NFTs will be subject to Capital Gains Tax. This applies whether you're selling an NFT for cryptocurrency or fiat, swapping one NFT for another, or gifting an NFT. In each of these cases, the profit made on the transaction is taxable as a capital gain, with tax due on any increase in value since the acquisition of the NFT.
Members of a Decentralized Autonomous Organization (DAO) can benefit financially in a number of ways. For instance, they might receive a portion of the profits generated by the DAO’s activities or sell their DAO tokens to investors. While the Canada Revenue Agency (CRA) has not provided specific guidelines on the taxation of DAOs, we can infer the tax treatment based on general principles for crypto assets.
Given that a DAO is not a registered entity and lacks central control, it functions similarly to a flow-through entity. This means the income earned by the DAO is passed directly to its members. As a result, any income distributed to DAO members is likely to be taxed as Income Tax. Furthermore, if DAO tokens appreciate in value and are sold, the profits would likely be subject to Capital Gains Tax.
When you use cryptocurrency to purchase goods or services, the CRA considers this a disposition of a capital asset. Therefore, any crypto spent in this way would be subject to Capital Gains Tax. To calculate the tax owed, you need to determine the difference between the fair market value of the crypto at the time of the transaction and your original cost basis (what you paid for it).
In Canada, the financial year aligns with the calendar year, running from January 1st to December 31st. This means that the tax year you will be reporting for is from January 1, 2024, to December 31, 2024. You must report any crypto-related income, capital gains, and losses to the CRA by April 30, 2025. Taxpayers can begin filing returns as early as the end of February, but April 30 is the final deadline for most individuals.
Self-employed individuals have until June 15, 2025, to file, but payments must still be made by April 30, 2025, to avoid penalties. It’s crucial to stay on top of these deadlines to ensure timely compliance.
When filing your tax return in Canada, you will report crypto income and capital gains on your annual Income Tax Return. You will need to use:
These forms can be filed online through the CRA’s My Account or via tax software like TurboTax.
Manually calculating your crypto taxes can be a time-consuming process, especially if you engage in frequent trading. You can either do it manually or use a crypto tax calculator like Koinly to save significant time.
To calculate your taxes manually, follow these steps:
For an easier and more accurate process, consider using Koinly, a crypto tax software designed to simplify reporting. Here’s how it works:
