Crypto Taxes Canada:
The Ultimate Guide for 2024

Crypto is subject to taxes in Canada, with investors having to pay federal income taxes over their crypto gains and income! Discover how Canada taxes crypto, how to get a 50% discount on your capital gains, how to report Canadian crypto taxes, tax forms to file, and more!

Are Cryptocurrencies Taxed in Canada?

Cryptocurrency trading in Canada is taxe at a federal income tax level. As an individual, gains from trading or spending crypto fall under income taxes. If you are running a business and dealing with cryptocurrencies, you’ll have to pay business taxes for your crypto activity.

How is Cryptocurrency Taxed in Canada?

Cryptocurrency taxes in Canada range from income taxes to business taxes, depending on your crypto activity. Here’s how each type of tax works for cryptocurrencies in Canada:

Capital Gains Tax

If your crypto trading generates a gain, you’ll need to pay capital gains tax, with the tax rate depending on your federal income bracket. However, individual investors can benefit from a 50% discount on their gains in Canada.

Income Tax

In Canada, cryptocurrency trading is taxed according to your federal income bracket. Transactions like trading or spending crypto to buy a product/service will fall under income taxes. In both cases, you’ll need to determine the gain on that transaction.

Business Income vs. Capital Gain for Cryptocurrency Taxes

Businesses are taxed under business income taxes over 100% of their cryptocurrency gains, while individuals get a 50% tax break.

Crypto Tax Rates in Canada for 2024

Here are the crypto tax rates for the fiscal year of 2024 in Canada:

Overview of Crypto Tax Rates

Capital Gains Tax Rates

In Canada, the capital gains tax rates will be the same as the federal income tax brackets since cryptocurrency is treated as property. However, investors can benefit from a 50% discount on their taxable gains in Canada. For example, if you have a gain of $5,000 in a trade, you’ll only get taxed on $2,500.

Income Tax Brackets

Here are the federal income tax brackets that apply to cryptocurrencies in 2024:

How to Calculate Gains on Cryptocurrency in Canada

Calculating Capital Gains

Investors need to calculate capital gains on transactions when they dispose of cryptocurrencies in Canada. These types of taxable transactions include:

• Crypto transactions (crypto-to-FIAT and crypto-to-crypto trades)
• Spending crypto to buy a product/service
• Gifting cryptocurrencies

Income Tax Calculation

In Canada, you need to determine the capital gain on your transactions (e.g., trading, spending crypto, gifting crypto), which will fall under the regular federal income tax rates. Your tax rate on crypto gains will depend on your total income for the year and the bracket you fall under. The tax rates in Canada can range from 15% to 33%.

Cost Basis Method

The cost basis method is used in Canada to determine crypto gains, enabling you to reduce gains and slightly save on your taxes. With this method, you can include the exchange and gas fees paid in your cost basis, increasing it, which reduces capital gains. Let’s look at an example:

You bought 1 Bitcoin at $60K and paid a fee of 0.1% to buy that Bitcoin ($60).
Your cost basis is the purchase price of that Bitcoin plus the fee ($60K+$60).
Without including the transaction fees, you cost basis would be lower, resulting in higher capital gains;
You can deduct that cost basis from your sales proceeds (the amount you sold the Bitcoin for).

What crypto transactions are tax free in Canada?

Many crypto transactions are tax free in Canada, including:

1. Holding crypto without triggering any sale
2. Transferring crypto between personal wallets
3. Buying crypto with FIAT (e.g., CAD)
4. Receiving a crypto gift

Specific Crypto Transactions and Their Tax Implications

Crypto-to-CAD

When you sell a cryptocurrency for a FIAT currency like CAD, you trigger a tax event. You need to determine the gain on the transaction and pay capital gains taxes (based on your total income for that year).

Buy and HODL

Buying cryptocurrencies with FIAT in Canada is a tax-free event since you’re only buying the asset. Holding cryptocurrency without triggering any sale/gift/expenditure of that cryptocurrency is a tax-free event.

Crypto-to-Crypto Trades

Trading a cryptocurrency for another cryptocurrency is a taxable event in Canada, where you must determine the gain on that transaction and pay income taxes over it.

Tax on Various Crypto Activities

In Canada, many crypto transactions are taxed, according to the CRA. Here’s how different crypto trades, from airdrops to staking, are taxed in Canada:

Staking

As an individual investor, crypto staking rewards are taxed when you receive and sell them. When you receive staking rewards, you need to determine the Fair Market Value (in CAD) at that moment and add it to your income. This FMV is taxed according to your federal income tax rate. When you sell your staking rewards for FIAT or another cryptocurrency, you have to determine the gain on that transaction and be taxed over capital gains taxes. Your cost basis on this trade is the FMV of your staking rewards. The tax rate on the gain will depend on your federal income tax bracket.

Mining

As an individual investor, mining rewards are not taxed when you receive them but only when you sell them as capital gains. Your total sales proceeds (i.e., the sale of the mining rewards) will be the gain from that trade, taxed according to your federal income tax bracket.

Lending

Unlike crypto mining, receiving interest from lending crypto in a protocol is taxed when you receive that interest (e.g., coins), according to your income taxes in Canada.

Airdrops and Forks

The CRA has not published any formal guidelines for the taxation of airdrop, but the conservative approach is to assume that you’re due income taxes when receiving new tokens from an airdrop and pay capital gains when you sell those tokens.

Lost or Stolen Crypto

In Canada, investors can deduct losses from stolen personal property, with crypto falling under that definition.

Gifts and Donations

In Canada, gifts and donations are a disposal of crypto, where investors need to determine the gains on those transactions and pay taxes over it. Donations can be even less tax-beneficial due to extra rules, where you still have to pay gains.

Advanced Crypto Tax Topics

The CRA has not published specific guidelines for many advanced crypto topics, but you can assume, from the regular tax laws, how to conservatively treat these advanced transactions, from DeFi to NFTs. Let’s clarify the main points about the taxation of advanced crypto topics.

NFTs

Buying an NFT with FIAT (e.g., CAD) is not a taxable event, but there is no specific guidance on how to treat other operations with NFTs. However, given the Canadian crypto tax laws, it can be assumed that selling an NFT for another NFT or cryptocurrency/FIAT is a taxable event, subject to capital gains taxes. Moreover, gifting an NFT or spending an NFT to purchase a product would also be subject to capital gains.

DeFi

You can do several activities on DeFi, from trading tokens on decentralized exchanges to earning rewards on DeFi protocols. Despite not having formal guidance from the CRA on DeFi, we can assume certain taxes on the following transactions:

• Earning rewards (e.g., staking, yield farming, liquidity tokens, Play-to-Earn games): Income taxes when you receive the rewards (based on their FMV);
• Trading tokens on a DEX (spot or margin trading, including Futures/Options): Capital gains;
• Earning NFT rewards from a DeFi protocol: Income taxes;
• Buying and selling NFTs: Capital gains

DAO Taxes

Decentralized Autonomous Organizations (DAOs) are a novel concept of an organization/company working on a mission in a Web3 environment. People can earn compensation from their work on a DAO, leading to income taxes, but also have “shares” (tokens) that they can sell, resulting in a taxable event, subject to capital gains.

Margin Trading, Derivatives, and Other CFDs

Margin trading, from Futures to Options, follows the same tax approach as regular spot trading, falling under capital gains in Canada. You need to determine the gain on each trade and pay taxes over that gain according to your federal income tax bracket.

How to Report Cryptocurrency Taxes in Canada

In Canada, investors have to keep proper records of their transactions, including data about prices, purchases, and fees, to report their gains and income on the right forms. Here’s how to report cryptocurrency taxes in Canada:

Required Forms and Documentation

In Canada, to report crypto taxes, you need to file two forms to report your capital gains and income:

1. The Schedule 3 Form to report capital gains from cryptocurrencies (and other assets);
2. Income Tax Return (T1) to report your crypto income.

Filing Deadlines

In 2025, crypto investors have until April 30, 2025, to file the obligatory forms and pay their crypto taxes.

Correcting Previous Reporting Errors

There are legal ways to correct errors on your forms and avoid penalties/fines by changing your income tax return or filling a voluntary case with the tax authority through the formal channels.

Reduce YOUR Crypto Taxes in Canada

There are several ways to reduce crypto taxes in Canada, from tax-free savings accounts to offsetting losses. Here are the main ways to reduce your crypto taxes in Canada:

Hold crypto

The best way to postpone crypto taxes is to hold assets like Bitcoin in the long term instead of day trading, increasing the chances of price appreciation.

Tax-Free Savings Account (TFSA)

Tax-free Savings Accounts (TFSA), similar to IRAs in the US, are one of the best ways for Canadian investors to allocate funds into assets like crypto ETFs or Futures and enjoy tax savings.

Registered Retirement Savings Plan (RRSP)

You can invest in a Registered Retirement Savings Plan (RRSP) and enjoy deductions from those contributions.

Offset and Harvesting Losses

In Canada, you can offset 50% of capital losses from your other capital gains to reduce the total taxable profits and effectively lower your crypto taxes.

Business Deductions

If you’re running a business and engaging with cryptocurrencies, you can use several deductions to reduce your profit and business taxes.

The CRA & Cryptocurrency’s

The Canada Revenue Agency (CRA) is tracking crypto investors in collaboration with other tax authorities worldwide to enforce tax laws. Beyond those collaborations, the CRA works with financial authorities and crypto players to share customer information (including investors who do not report their gains/income). Let’s look into more details on how the CRA deals with cryptocurrency.

Can the CRA Track Crypto?

Tax authorities like CRA are increasingly attentive to cryptocurrency and enforcing laws to charge crypto investors who do not report their crypto gains and income. The CRA has the workforce and technology to track investors who do not fulfill their tax responsibilities regarding cryptocurrencies.

What Crypto Records Will the CRA Want?

Crypto investors should carefully track their transactions for tax and legal purposes. These crypto records usually include:

• The date when you purchased/sold a cryptocurrency
• The amount of cryptocurrency purchased (its cost basis)
• The fees to acquire cryptocurrencies
• The sales proceeds
• Date of receiving crypto income like staking, airdrops, and mining
• The Fair Market Value (in CAD) of the rewards received from staking, mining, hard forks, etc.

Conclusion on Crypto Taxes in Canada

Cryptocurrency gains are taxed in Canada subject to the federal income tax rates depending on the bracket you fall under. Canada offers a benefit for individual investors, with only 50% of gains taxed at a federal level, while businesses are taxed on 100% of their gains. The easiest way to automatically track your crypto gains and generate the right tax forms is to use crypto tax software like CoinTracking.

Summary of Key Points

TL;DR about crypto taxes in Canada

• If you sell crypto, you need to determine the gain on your trade and pay capital gains taxes
• Only 50% of your crypto gains are taxable as an individual
• Your tax rate on crypto profits will depend on your federal income tax bracket
• Earning crypto leads to income taxes based on the Fair Market Value of the coins you received
• Selling, spending, and gifting crypto is a taxable event, subject to capital gains taxes
• Crypto gains and income need to be reported in your income tax return and Schedule 3
• CoinTracking can help you track all the information you need to file Canadian crypto taxes by the April 30, 2025 deadline.