Crypto Tax Reporting in Canada: What You Owe and How to File

How the CRA Treats Cryptocurrency

The Canada Revenue Agency classifies cryptocurrency as a commodity, not a currency. That means crypto transactions are subject to either capital gains tax or business income tax, depending on your circumstances.

Most individual investors pay capital gains tax. If you’re trading frequently, at high volume, or with the intention of earning a profit through short-term trades, the CRA may classify your activity as business income — which means 100% of profits are taxable instead of only 50-66.67%.

What’s Taxable and What’s Not

Taxable events

Event	Tax treatment
Selling crypto for CAD	Capital gain or loss
Trading crypto-to-crypto (e.g., BTC → ETH)	Capital gain or loss (deemed disposition)
Spending crypto on goods/services	Capital gain or loss
Mining income	Business income or capital gain
Staking/lending rewards	Income at fair market value when received
Airdrops	Income at fair market value when received
Payment for services in crypto	Employment/business income

Not taxable

• Buying crypto with CAD — no disposition occurs
• Transferring between your own wallets — no change in ownership
• HODLing — unrealized gains are not taxed
• Gifting to a spouse — rollover at adjusted cost base (ACB)

The Capital Gains Inclusion Rate

Starting in 2025, capital gains have a tiered inclusion rate:

Annual capital gains	Inclusion rate
First $250,000	50% (half is taxable)
Above $250,000	66.67% (two-thirds is taxable)

For most individual crypto investors, the 50% rate applies. The higher 66.67% rate kicks in only on gains exceeding $250,000 in a single year.

How to Calculate Your Capital Gain

Capital gain = Proceeds of disposition − Adjusted cost base (ACB) − Transaction fees

Adjusted cost base (ACB)

The ACB is the average cost of all units of a particular crypto you hold. Every time you buy more, the ACB is recalculated:

New ACB = (Previous total ACB + New purchase cost) ÷ Total units held

Worked example

1. January: Buy 1 BTC at $40,000 (ACB = $40,000)
2. March: Buy 0.5 BTC at $50,000 (total cost: $40,000 + $25,000 = $65,000 for 1.5 BTC → ACB per BTC = $43,333)
3. October: Sell 1 BTC at $95,000

Capital gain:

• Proceeds: $95,000
• ACB of 1 BTC: $43,333
• Trading fees: $50
• Gain: $95,000 − $43,333 − $50 = $51,617

Taxable amount (50% inclusion): $51,617 × 50% = $25,809

At a 30% marginal tax rate, the tax owing would be approximately $7,743.

The Superficial Loss Rule

If you sell crypto at a loss and repurchase the same crypto within 30 days (before or after the sale), the CRA may deny the loss under the superficial loss rule. The denied loss is added to the ACB of the repurchased crypto.

This prevents “wash sales” — selling at a loss for the tax benefit and immediately buying back.

How to Report Crypto on Your Tax Return

Capital gains (most investors)

• Report on Schedule 3 (Capital Gains or Losses)
• List each disposition: date, proceeds, ACB, gain/loss
• The net capital gain flows to your T1 return

Business income

• Report on Form T2125 (Statement of Business or Professional Activities)
• All profits are fully taxable (no 50% inclusion)
• You can deduct business expenses (equipment, software, internet)

Mining and staking income

• Report the fair market value at the time of receipt as income
• When you later sell the mined/staked crypto, calculate capital gain using the FMV at receipt as your ACB

Record-Keeping Requirements

The CRA requires you to maintain records of every crypto transaction for at least six years. For each transaction, keep:

• Date of the transaction
• Amount of crypto involved
• Fair market value in CAD at the time
• The exchange or platform used
• Wallet addresses (for on-chain transactions)
• Transaction fees paid

Tip: Use crypto tax software or your exchange’s transaction history exports to generate this documentation automatically. Trying to reconstruct years of trades manually is extremely difficult.

The Bottom Line

• Crypto is taxed as a commodity — most gains are capital gains with a 50% inclusion rate (66.67% above $250,000)
• Every crypto-to-crypto trade is a taxable disposition — not just cashing out to CAD
• Track your adjusted cost base carefully — it changes with every purchase
• Watch the superficial loss rule if you’re harvesting losses
• Report on Schedule 3 (capital gains) or T2125 (business income) depending on your trading pattern
• Keep records for six years — the CRA is increasingly auditing crypto traders

Use the crypto tax calculator to estimate your capital gains tax, and the capital gains calculator to model the inclusion rate impact on your total tax bill.