Disclaimer: This page is for general information purposes only and should not be used as a substitute for consultation with tax professionals. By continuing on this page, you hereby acknowledge and agree that Crypto.com has not provided any tax advice, you will rely on your own tax counsel with respect to your tax obligations, and Crypto.com has made no representations or guarantees about the accuracy, completeness, or applicability of any information on this page. Further, you acknowledge and agree that any examples or calculations provided on this page are for illustrative purposes only and may not apply to you or your use of any of Crypto.com’s services, notwithstanding any apparent similarities between the fact patterns presented in such examples and those relevant to your individual circumstances. Crypto.com is not responsible for any third-party material referenced on this page, and the inclusion of any third-party material on this page should not be construed as Crypto.com’s support of, agreement with, or attestation to the accuracy or applicability of such material. The Canadian Income Tax Act does not explicitly address the various cryptocurrency transactions and resulting tax implications. Guidance from the Canada Revenue Agency (CRA) may be supported or challenged by Canadian courts.

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Table of contents:

Is cryptocurrency taxable?

How is my cryptocurrency taxed?

When do I need to report my crypto taxes?

Cryptocurrency capital gains tax rate

What are crypto capital losses?

How do I file crypto tax reports?

Cost Basis Methods

Tax-Free Crypto Transactions

Tax Rules on other Crypto Transactions

What are transaction fees in crypto transactions?

Other Tax Considerations

Is cryptocurrency taxable?

Yes, cryptocurrency is taxable in a variety of circumstances. Cryptocurrency is generally treated as commodities for Canadian tax purposes. The taxable events of crypto transactions are generally characterized as either capital gain (or loss) or business income, depending on the situation and the individual’s intent. In general, you may need to report a transaction on your Canadian personal income tax return when you dispose of cryptocurrency. On the website of CRA, disposition of crypto means as follows:

  • Sell or make a gift of cryptocurrency

  • Trade or exchange cryptocurrency, including disposing of one cryptocurrency to get another cryptocurrency

  • Convert cryptocurrency to government-issued currency, such as Canadian dollars

  • Use cryptocurrency to buy goods or services

How is my cryptocurrency taxed?

Cryptocurrency could be subject to Income Tax or Capital Gains Tax. If you earn taxable crypto income, it may be taxed as ordinary income at its fair market value on the date you receive it.

If you are a typical crypto investor, who treats trading cryptocurrency as a hobby, you may pay capital gain tax on the capital gain made from the disposition of your crypto asset. In such a scenario, the taxable income would be calculated based on the net proceeds (i.e. proceeds less any selling transaction fee) less the adjusted cost basis of the crypto times 50%.

On the other hand, if you are running a crypto business (not hobby intent), the income from disposition would be considered as business income/loss. Note: Crypto.com Tax does not support business intent transactions currently. Therefore, this may not be the right tool for you if your crypto transactions constitute business activities as opposed to hobby transactions.

When do I need to report my crypto taxes?

You need to report your taxable crypto transactions on your Canadian personal income tax return (T1 General). Subject to any applicable extensions, the federal income tax filing and payment deadline for 2022 tax year is April 30, 2023. If you are self-employed, the deadline for filing your Canadian income tax return is June 15, 2023. However, the deadline for tax payment is still April 30, 2023.

Cryptocurrency capital gains tax rate

There is no Capital Gains Tax rate in Canada. Your capital gains will be taxed at the same rate as your Federal Income Tax rate and Provincial Income Tax rate. However, you'll only pay tax on half of your capital gain. Please refer to the CRA website for more details about the income tax rates.

What are crypto capital losses?

In general, capital losses mean that the amount you spent when you bought or received the crypto (its adjusted cost basis) exceeds the proceeds you received for its sale. You do not pay tax on capital losses, but you can offset your capital gains with those losses.

If your capital losses exceed your capital gains, you may carry forward the unutilized losses to future tax years. You may refer to the CRA website for more details about the allowable capital losses.

How do I file crypto tax reports?

Crypto.com Tax* is a user-friendly tax product to generate tax reports for tax filing. You may follow the below steps to finish the crypto tax filing:

  1. Register a FREE account in Crypto.com Tax

  2. Import your crypto transactions in Crypto.com Tax

    Crypto.com Tax supports over 30 popular exchanges and wallets. Apart from the supported exchanges/ wallets, you may also add your transactions manually.

  3. Generate tax reports and check your tax summary

    You can export your reports in multiple formats (e.g. Capital gain/loss report and Transaction history report) at no cost.

  4. Complete Schedule 3 for tax filing purposes

After generating the Capital gain/loss report, you may use it to complete Schedule 3 and attach it with your individual tax form (T1) for tax filing.

*Crypto.com Tax does not provide tax advice and is not intended to be a substitute for consultation with your own tax professional.

Cost Basis Methods

When you have multiple crypto investments and transactions, cost basis methods dictate how you calculate your crypto's cost basis. Critically, cost basis methods affect how your capital gains are calculated.

The CRA only allows users to use Adjusted cost base (ACB) as the cost basis method when calculating taxes. Please see our FAQ for more details on the ACB method.

Tax-Free Crypto Transactions

Is buying crypto taxable?

Crypto purchases with fiat money (e.g. CAD --> BTC) are not subject to tax; however, it’s extremely important to keep track of the acquisition cost (including associated fees), as it becomes the cost basis of the crypto and will be used for calculating capital gains/losses for subsequent taxable events (i.e., dispositions/sales).

Do I pay tax when transferring crypto between my own accounts?

Generally, transferring crypto between your own accounts is tax-free when the associated fee is in fiat.

However, you may need to pay tax if the associated fee is in crypto as the difference between the FMV of the crypto disposed to settle the fee and its adjusted cost basis may result in capital gain/loss. See additional information on fees below.

Is swapping crypto taxable?

A token swap/migration occurs whenever an old coin is exchanged for a new coin (e.g. MCO converting to CRO). Depending on the specific circumstances related to the exchange, such exchanges may be taxable events and reportable on your tax return, regardless of whether the exchange results in capital gain/loss.

Moreover, if the associated fee is settled in crypto, there may be a difference between the FMV and the adjusted cost basis of the crypto used to settle the fee, which may result in capital gain/loss. See additional information on fees below.

Tax Rules on other Crypto Transactions

Is selling crypto taxable?

Sale of crypto for fiat currency (e.g. BTC --> CAD) is a taxable and reportable event. The capital gains/losses can be calculated by subtracting the cost basis and the associated fees from the proceeds.

Example:

You bought 10 ETH for CAD 10,000 on 1 Feb 2020 and then sold 5 ETH for CAD 10,000 on 2 Feb 2021.

Results:

Cost basis per coin: CAD 10,000/10 = CAD 1,000 per ETH

Proceeds: CAD 10,000

Total cost basis for 5 ETH: CAD 1,000 * 5 = CAD 5,000

Capital gain/loss: CAD 10,000 - 5,000 = CAD 5,000

Do I pay tax when trading one crypto for another?

Yes, exchanges of one crypto for another crypto (e.g. ETH --> CRO) are generally taxable and reportable events. The capital gains/losses can be calculated by subtracting the cost basis from the FMV (fair market value) of the coins you receive.

Example:

You bought 10 ETH for CAD 10,000 and then sold 5 ETH for 1 BTC. The FMV per BTC is CAD 12,000.

Results:

Cost basis per coin: CAD 10,000/10 = CAD 1,000 per ETH

Proceeds: CAD 12,000

Total cost basis for 5 ETH: CAD 1,000 * 5 = CAD 5,000

Capital gain/loss: CAD 12,000 - 5,000 = CAD 7,000

Do I pay tax when spending crypto?

Paying for goods and services with crypto generally results in a taxable event due to the disposition of the crypto. The capital gains/losses can be calculated by subtracting the cost basis from the FMV (fair market value) of the coins you spend.

Example:

You bought 10 ETH for CAD 10,000 and then paid 5 ETH for some services. The FMV per ETH is CAD 2,000.

Results:

Cost basis per coin: CAD 10,000/10 = CAD 1,000 per ETH

Proceeds: CAD 2,000 * 5 = CAD 10,000

Total cost basis for 5 ETH: CAD 1,000 * 5 = CAD 5,000

Capital gain/loss: CAD 10,000 - 5,000 = CAD 5,000

Is it taxable when gifting crypto to others?

Yes, sending a gift in crypto is generally taxable as it results in the disposition of the crypto. The capital gains/losses can be calculated by subtracting the cost basis from the FMV (fair market value) of the coins on the date of gifting.

When the crypto is ultimately sold by the recipient of the gift, the proceeds of disposition is the FMV on this date.

Example:

You bought 10 ETH for CAD 10,000 and then sent 5 ETH to friends as a gift. The FMV per ETH is CAD 2,000.

Results:

Cost basis per coin: CAD 10,000/10 = CAD 1,000 per ETH

Proceeds: CAD 2,000 * 5 = CAD 10,000

Total cost basis for 5 ETH: CAD 1,000 * 5 = CAD 5,000

Capital gain/loss: CAD 10,000 - 5,000 = CAD 5,000

Do I pay tax when donating crypto to charity?

Yes, it is generally taxable when you donate crypto to charity, and results in capital gains/losses. Based on the current CRA interpretations, the CRA allows donations of specified capital assets without recognition of the capital gain to a qualified donee (e.g. registered charities in Canada). Still, cryptocurrency is not included in the list of specified assets. The capital gains/losses can be calculated by subtracting the cost basis from the FMV of the coins on the date of donation, less the amount or benefit received or receivable from the charity.

In order to qualify for a donation credit in Canada, a charitable donation receipt must be issued by the receiving organization, with adherence to the appropriate CRA requirements: the receiving organization must generally be a registered Canadian charity. This receipt should be reported on Schedule 9 - Donation and Gifts and attached to your individual Canadian income tax return (T1).

Example:

You bought 1 BTC for CAD 10,000 and then donated 1 BTC to a charity. The FMV per BTC is CAD 20,000.

Results:

Capital gain/loss: CAD 20,000 - 10,000 = CAD 10,000

Note: CAD20,000 may be tax deductible and should be reported as a donation.

Receiving cryptocurrency other than direct purchase or transfer

Is mining crypto taxable?

Crypto mining is generally not taxable at the time of receipt. However, you may be subject to Capital Gains Tax when the mined coins are disposed (i.e. sold). The capital gain/loss is calculated by subtracting the zero cost basis from the FMV of the crypto on the date of disposition.

If the crypto is considered to be a capital asset (i.e. mining as a hobby), the mining expenses (e.g. start-up cost, home office expenses) cannot be taken as a deduction to the resulting capital gain/loss.

Example:

You received 10 ETH from mining and then sold 5 ETH for 1 BTC. The FMV per BTC is CAD 12,000.

Results:

Cost basis per coin: 0 per ETH (i.e. zero cost basis)

Proceeds: CAD 12,000

Capital gain/loss: CAD 12,000

How are forks being taxed?

Hard fork takes place when there is a split on the new crypto that you currently hold. Similar to mining, the new coins/tokens may be subject to Capital Gains Tax at dispositions and have a zero-cost basis. The calculation of capital gains/losses is the same as mining.

In addition, in a soft fork that does not create a new coin, you would not be deemed to have received any income.

How are airdrops being taxed?

Airdrops are basically some free coins you received from a marketing campaign or events.

In general, you will not be subject to Income Tax when you receive new coins from airdrops. However, they are subject to Capital Gains Tax at dispositions. The calculation of capital gains/losses is the same as mining.

Do I pay tax when receiving crypto rewards?

You can get crypto rewards in several ways, e.g. stake/earn rewards and bonus, referral bonus.

In general, the reward income is not taxable at the time of receipt. However, it is subject to Capital Gains Tax when you dispose of the crypto rewards. The calculation of capital gains/losses is the same as mining.

Do I pay tax when receiving gifts in crypto?

Receiving a crypto gift is not taxable at the time of receipt. The rationale is that the individual gifting the crypto would have been responsible for addressing taxation issues for the crypto on the date they disposed of the crypto.

However, the received coins may be subject to capital gains/losses at dispositions. The cost basis of the received coins is the FMV on the date of receipt. The capital gain/loss is calculated by subtracting the cost basis from the FMV of the crypto on the date of disposition.

Example:

You received 10 ETH from friends as a gift and the FMV per ETH is CAD 1,000. You then sold 5 ETH for 1 BTC and the FMV per BTC is CAD 12,000.

Results:

Proceeds: CAD 12,000

Total cost basis for 5 ETH: CAD 1,000 * 5 = CAD 5,000

Capital gain/loss: CAD 12,000 - 5,000 = CAD 7,000

Is it taxable when receiving crypto payment? (e.g. salary payment)

If you receive a crypto payment as a form of compensation, it may be considered as your employment income.

The FMV of received coins would be treated as part of your taxable employment income for that year and would be reportable on Ithe ncome Tax and Benefit Return (T1) from the Statement of Remuneration Paid (T4). If you do not receive your T4 statement from your employer, you should consult your tax professional about what to do.

Each individual is responsible for calculating and reporting income on their Canadian tax return even if the payor (e.g., employer) has not supplied appropriate documentation. It is your responsibility to consult a tax professional to ensure you have fulfilled your tax obligations.

The FMV of the crypto received as compensation will be your cost basis for such crypto assets in the event of a future disposition.

Example:

You received 10 ETH as salary where the FMV per ETH is CAD 1,000. You then sold 5 ETH for 1 BTC where the FMV per BTC is CAD 12,000.

Results:

Proceeds: CAD 12,000

Total cost basis for 5 ETH: CAD 1,000 * 5 = CAD 5,000

Capital gain/loss: CAD 12,000 - 5,000 = CAD 7,000

Note: CAD 10,000 (10 ETH @ FMV of CAD 1,000 each) should be reported as income from wages/salaries at the time of receipt.

Do I pay tax when getting a rebate in crypto?

Note: In general, on the Crypto.com platform, you can only get rebates from certain credit card and staking transactions (as of the time of this article’s publication). Please see the Crypto.com terms and conditions for eligibility criteria and other details on rebates.

In cases of rebates associated with spending transactions (e.g., credit card spends), rebates (including any received in the form of crypto coin/token) generally are not taxable at the time of receipt. However, like other cryptos, they are subject to capital gains/losses at disposition. The cost basis of the received coin/token is equal to the FMV at the time of receipt. The calculation of capital gains/losses is the same as mining.

Example:

You received 0.1 ETH from rebates where FMV per ETH is CAD 10,000. You then sold 0.1 ETH for CAD 1,200.

Results:

Cost basis per coin: CAD 10,000 per ETH

Proceeds: CAD 1,200

Total cost basis for 0.1 ETH: CAD 10,000 * 0.1 = CAD 1,000

Capital gain/loss: CAD 1,200 - 1,000 = CAD 200

How are the transaction costs on blockchain being taxed?

You may incur expenses when a blockchain transaction is approved/failed/canceled. For example, when a gas fee is charged due to a failed blockchain transaction.

These transaction costs may be subject to capital gains/losses. The capital gains/losses, where applicable, can be calculated by subtracting the cost basis from the FMV of the coins charged.

Example:

You bought 2 ETH for CAD 2,000 and 0.1 ETH is charged due to a failed blockchain transaction where the FMV per ETH is CAD 1,500.

Results:

Cost basis per coin: CAD 2,000/2 = CAD 1,000

Proceeds (due to disposition of 0.1 ETH to cover the gas fee): CAD 1,500 * 0.1 = CAD 150

Total cost basis for 0.1 ETH: CAD 1,000 * 0.1 = CAD 100

Capital gain/loss: CAD 150 - 100 = CAD 50

How is margin trading of crypto taxed?

Margin trading of crypto would generally incur capital gain/loss in the following cases:

  • Closing the position

  • Payment of margin interest with crypto

  • The forced sale of your collateral by exchanges (i.e. a margin call)

Crypto.com Tax does not support margin trading transactions at this moment. Please consult your tax advisor if you’re actively involved in margin trading.

What are transaction fees in crypto transactions?

Fees can show up in all kinds of cryptocurrency transactions and are often the most cryptic part when calculating taxes. The tax treatment of fees depends on whether the fees are incurred in taxable or non-taxable transactions. You may also need to consider if the transaction fee is paid in cryptocurrency.

How is the transaction fee taxed in non-taxable events?

Typically in a non-taxable event (e.g. buying/transferring/swapping crypto), the FMV of the fee will be added to the cost basis of the resulting coins. Thus, in this example, the transaction fees you pay upon purchase will be considered as part of the cost basis if and when a disposition eventually happens and will reduce the capital gain.

Example 1: Buying crypto

You bought 10 ETH for CAD 10,000, with a purchase fee of CAD 100.

Results:

Cost basis per coin: CAD (10,000 + 100) / 10 = CAD 1,010 per ETH

Example 2: Transferring crypto

You bought 10 ETH for CAD 10,000 in account A. You then transferred 5 ETH from account A to account B, with a transfer fee of CAD 50.

Results:

Cost basis per coin in account A: CAD 10,000 / 10 = CAD 1,000 per ETH

Cost basis per coin in account B: CAD (1,000 * 5 + 50 ) / 5 = CAD 1,010 per ETH

How are transaction fees taxed in taxable events?

In a taxable event (e.g. selling/trading crypto), the FMV of the fee is generally considered to be an expense, which is typically deducted from the proceeds when calculating capital gain/loss.

Example:

You bought 10 ETH for CAD 10,000. You then sold 5 ETH for CAD 10,000, with a selling fee of CAD 100.

Results:

Proceeds: CAD 10,000

Cost basis per coin: CAD 10,000/10 = CAD 1,000 per ETH

Total cost basis for 5 ETH: CAD 1,000 * 5 = CAD 5,000

Total expense: CAD 100

Net Proceeds: CAD 10,000 - 100 = CAD 9,900

Capital gain/loss: CAD 9,900 - 5,000 = CAD 4,900

What if the transaction fee is in cryptocurrency?

When the transaction fee is in crypto, it should be valued at FMV and would generally separately result in a capital gain/loss as it would be deemed a disposition of capital property. Therefore, in taxable events, your transaction may result in 2 separate reportable capital gains/losses, each of which should be separately listed in your transaction records.

For non-taxable events, you would just need to calculate the capital gain/loss from the fee and the FMV of the fee will be added to the resulting coin's adjusted cost basis.

Example 1: Transferring crypto

You bought 10 ETH for CAD 10,000 in account A. You then transferred 5 ETH from account A to account B, with a transfer fee of 0.1 ETH. Assume the ETH price has gone up to CAD 2,000 on the day of transfer.

Results:

Cost basis per coin in account A: CAD 10,000/10 = CAD 1,000 per ETH

Cost basis per coin in account B: CAD (1,000 * 5 + 2,000 * 0.1)/5 = CAD 1,040 per ETH

Capital gain/loss from the fee = CAD (2,000 - 1,000) * 0.1 = CAD 100

Example 2: Selling crypto

You bought 10 ETH for CAD 10,000 and then sold 5 ETH for CAD 10,000, with a selling fee of 0.1 ETH. We know the ETH price is CAD 2,000 on the day of sale.

Results:

Proceeds: CAD 10,000

Cost basis per coin: CAD 10,000/10 = CAD 1,000 per ETH

Total cost basis for 5 ETH: CAD 1,000 * 5 = CAD 5,000

Total expense: CAD 2,000 * 0.1 = CAD 200

Net Proceeds: CAD 10,000 - 200 = CAD 9,800

Capital gain/loss on transaction: CAD 9,800 - 5,000 = CAD 4,800

Capital gain/loss on fee: CAD (2,000 - 1,000) * 0.1 = CAD 100

Total capital gain/loss: CAD 4,800 + 100 = CAD 4,900

Other Tax Considerations

Do I need to keep records of crypto transactions?

It is important to keep track of your crypto transactions as well as the market value of the crypto at critical junctures throughout these activities. The CRA provides general guidance that a taxpayer should keep records for at least 6 years to substantiate their tax positions. The CRA may ask for supporting documents other than official receipts, such as canceled checks/bank statements. It is also suggested to keep a copy of your tax return and related notice of assessment/reassessment.

If you are a Crypto.com Tax user, it's easy to keep proper records of your crypto activities by simply syncing your wallets/exchanges or importing your transactions on Crypto.com Tax.

What is the Superficial Loss Rule?

The Superficial Loss Rule may disallow a loss from the disposition (i.e. capital losses) if you purchase a crypto asset within 30 days before or after a sale. This is to prevent individuals from taking advantage of timing and temporary losses. The rule applies when the below 2 conditions are met:

  1. You (or a person affiliated with you) buy or have a right to buy, the same or identical property (called "substituted property") during the period starting 30 calendar days before the sale and ending 30 calendar days after the sale.

  2. You (or a person affiliated with you) still own or have a right to buy, the substituted property 30 calendar days after the sale.

Crypto.com Tax will display a warning message in the interface for all the transactions that potentially meet the superficial loss rule. Please consult your tax professional and adjust the transactions at your own discretion.

What are Foreign property regulations?

The CRA requires you to file the Foreign Income Verification Statement (T1135) if you own more than CAD100,000 of “specified foreign property” in aggregate during the year. Some of the cryptocurrencies may fall into the list of “foreign property”, depending on where it is located and not necessarily in the country represented by the fiat currency. Please consult your tax professional and determine whether you need to fill out the form.

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