The CRA is clear: cryptocurrency is not a currency for tax purposes — it's a commodity (property). Every time you sell, trade, or spend crypto, you have a taxable event. The good news: the 50% capital gains inclusion rate still applies for most investors. Here's everything you need to know.
How the CRA Taxes Cryptocurrency (2025)
Capital Gains Treatment (Most Investors)
Example: Buy 1 BTC for $40,000 CAD. Sell for $80,000 CAD. Capital gain = $40,000. Taxable amount = $20,000 (50%). At a 43% marginal rate, you pay $8,600 in tax — an effective rate of 21.5% on the gain.
⚠️ Business Income Exception
If the CRA determines you are trading crypto as a business (day trading, high frequency, professional activity), 100% of profits are taxable as business income — not 50% capital gains. Signs the CRA looks for: daily trading, using technical analysis professionally, treating it as primary income.
What Triggers a Taxable Event in Canada
🔴 TAXABLE Events
- •Selling crypto for CAD/USD — capital gain/loss
- •Trading crypto-to-crypto (BTC → ETH) — deemed disposition
- •Buying goods/services with crypto — treated as sale at market value
- •Mining crypto — business income when received
- •Staking rewards — income when received at market value
- •Crypto as payment for work — employment/business income
- •Gifting crypto — deemed disposition at fair market value
🟢 NOT Taxable Events
- •Buying crypto with CAD — just sets your ACB
- •Transferring between your own wallets — no disposition
- •HODLing — unrealized gains not taxed until sold
Note: Keep transfer records (wallet addresses, timestamps) to prove funds stayed in your control.
Real-World Examples
Long-Term Bitcoin Hold
Simple buy-and-sell (capital gains treatment)
Effective tax rate: 21.5% on the $75,000 gain
Crypto-to-Crypto Trade
BTC → ETH swap (both are taxable events)
Key point: You never touched CAD, but still owe tax on the BTC gain at the time of the swap. Many investors are caught off guard by this.
How to Report Crypto on Your Canadian Tax Return
Step 1: Calculate Your ACB for Each Coin
Use the Adjusted Cost Base method — average the cost of all units of each crypto you hold. Transaction fees add to your ACB. Use software like Koinly, CoinTracker, or a spreadsheet.
Step 2: Report on Schedule 3 (Capital Gains)
List each disposition on Schedule 3 of your T1 return. Include: description of property, proceeds of disposition, adjusted cost base, and outlays/expenses. Net capital gains flow to line 12700 of your T1.
Step 3: Check T1135 Threshold
If you held more than $100,000 CAD in crypto on foreign exchanges (Coinbase, Kraken, Binance, etc.) at any point during the year, you must also file Form T1135. Failure to file can result in significant penalties.
Step 4: Keep Records for 6 Years
Export transaction history from all exchanges. Record wallet transfers with dates and amounts. The CRA can audit crypto transactions going back 6 years (longer if fraud is suspected).
2025 Reminder: Inclusion Rate Stayed at 50%
The proposed capital gains inclusion rate increase to 66.67% was cancelled in late 2024. All crypto capital gains in 2025 are still taxed at the 50% inclusion rate — meaning only half your profit is added to your taxable income.
Frequently Asked Questions
Frequently Asked Questions
Q:Is cryptocurrency taxed as capital gains or income in Canada?
A:It depends on your activity. For most Canadians who buy and hold crypto as an investment, profits are capital gains — only 50% of the gain is taxable. However, if the CRA determines you are 'trading' crypto like a business (frequent buys/sells, using it as inventory, or trading as your primary income), 100% of profits are taxable as business income. The CRA looks at factors like frequency of transactions, holding period, and whether you have specialized knowledge of crypto markets. When in doubt, consult a tax professional.
Q:What crypto transactions are taxable in Canada?
A:The CRA considers these taxable events: (1) Selling crypto for Canadian or US dollars — triggers capital gain/loss. (2) Trading one crypto for another (e.g., Bitcoin to Ethereum) — this is a deemed disposition; you must calculate gain/loss at current market value. (3) Using crypto to buy goods or services — treated as a sale at current market value. (4) Mining crypto for profit — treated as business income when received. (5) Receiving crypto as payment for services — taxed as employment or business income. NOT taxable: simply buying crypto with cash, or transferring between your own wallets.
Q:Do I need to report crypto if I didn't cash out to dollars?
A:Yes. Trading Bitcoin for Ethereum (or any crypto-to-crypto trade) is a taxable event in Canada, even if you never touched Canadian dollars. The CRA views each swap as selling the first asset and buying the second. You must calculate the fair market value in CAD at the time of the trade and report any gain or loss. This surprises many crypto investors — keep detailed records of all trades, not just cash-outs.
Q:How do I calculate cost basis for crypto in Canada?
A:Canada requires the Adjusted Cost Base (ACB) method for calculating crypto gains. This means you average the cost of all units of a particular cryptocurrency you own. For example: Buy 1 BTC at $30,000, then buy 1 more BTC at $50,000 — your ACB is $40,000 per BTC. If you sell 1 BTC for $60,000, your gain is $60,000 - $40,000 = $20,000 (not $30,000). You must track ACB separately for each cryptocurrency. Crypto tax software like Koinly or CoinTracker can automate this.
Q:What records do I need to keep for crypto taxes in Canada?
A:The CRA requires you to keep records for at least 6 years. You should document: (1) Date of each transaction, (2) Type of transaction (buy, sell, trade, transfer), (3) Amount and type of crypto, (4) Value in CAD at time of transaction, (5) Exchange or wallet used, (6) Transaction fees paid (these add to your ACB). Export your transaction history from every exchange you've used. For DeFi, NFTs, and staking, manual tracking may be required. The penalty for failing to report is significant — the CRA can reassess multiple years.
Q:What is the T1135 foreign income form for crypto?
A:If you hold more than $100,000 CAD in foreign property (including crypto held on foreign exchanges) at any point during the year, you must file Form T1135 (Foreign Income Verification Statement). Crypto held on Canadian exchanges or in your own wallet may not require T1135, but crypto on US or international exchanges (Coinbase, Binance, Kraken, etc.) likely qualifies as foreign property. Failure to file T1135 can result in penalties of $25/day up to $2,500, plus additional penalties for late filing.
Question: Is cryptocurrency taxed as capital gains or income in Canada?
Answer: It depends on your activity. For most Canadians who buy and hold crypto as an investment, profits are capital gains — only 50% of the gain is taxable. However, if the CRA determines you are 'trading' crypto like a business (frequent buys/sells, using it as inventory, or trading as your primary income), 100% of profits are taxable as business income. The CRA looks at factors like frequency of transactions, holding period, and whether you have specialized knowledge of crypto markets. When in doubt, consult a tax professional.
Question: What crypto transactions are taxable in Canada?
Answer: The CRA considers these taxable events: (1) Selling crypto for Canadian or US dollars — triggers capital gain/loss. (2) Trading one crypto for another (e.g., Bitcoin to Ethereum) — this is a deemed disposition; you must calculate gain/loss at current market value. (3) Using crypto to buy goods or services — treated as a sale at current market value. (4) Mining crypto for profit — treated as business income when received. (5) Receiving crypto as payment for services — taxed as employment or business income. NOT taxable: simply buying crypto with cash, or transferring between your own wallets.
Question: Do I need to report crypto if I didn't cash out to dollars?
Answer: Yes. Trading Bitcoin for Ethereum (or any crypto-to-crypto trade) is a taxable event in Canada, even if you never touched Canadian dollars. The CRA views each swap as selling the first asset and buying the second. You must calculate the fair market value in CAD at the time of the trade and report any gain or loss. This surprises many crypto investors — keep detailed records of all trades, not just cash-outs.
Question: How do I calculate cost basis for crypto in Canada?
Answer: Canada requires the Adjusted Cost Base (ACB) method for calculating crypto gains. This means you average the cost of all units of a particular cryptocurrency you own. For example: Buy 1 BTC at $30,000, then buy 1 more BTC at $50,000 — your ACB is $40,000 per BTC. If you sell 1 BTC for $60,000, your gain is $60,000 - $40,000 = $20,000 (not $30,000). You must track ACB separately for each cryptocurrency. Crypto tax software like Koinly or CoinTracker can automate this.
Question: What records do I need to keep for crypto taxes in Canada?
Answer: The CRA requires you to keep records for at least 6 years. You should document: (1) Date of each transaction, (2) Type of transaction (buy, sell, trade, transfer), (3) Amount and type of crypto, (4) Value in CAD at time of transaction, (5) Exchange or wallet used, (6) Transaction fees paid (these add to your ACB). Export your transaction history from every exchange you've used. For DeFi, NFTs, and staking, manual tracking may be required. The penalty for failing to report is significant — the CRA can reassess multiple years.
Question: What is the T1135 foreign income form for crypto?
Answer: If you hold more than $100,000 CAD in foreign property (including crypto held on foreign exchanges) at any point during the year, you must file Form T1135 (Foreign Income Verification Statement). Crypto held on Canadian exchanges or in your own wallet may not require T1135, but crypto on US or international exchanges (Coinbase, Binance, Kraken, etc.) likely qualifies as foreign property. Failure to file T1135 can result in penalties of $25/day up to $2,500, plus additional penalties for late filing.
Related Canadian Tax Guides
Need Help Reporting Crypto Taxes?
Crypto tax can be complex — especially with DeFi, staking, and multiple exchanges. Our advisors can help you stay CRA-compliant and minimize your tax bill.