Are All Crypto Trades Taxable?

Yes, all cryptocurrency trades, including crypto-to-crypto and crypto-to-FIAT trades, are taxable under capital gains taxes in Canada.

In Canada, 50% of the profits from your crypto trades are taxed according to your income tax bracket unless you’re trading as a professional or under a company entity.

Crypto Trading Tax Cheat Sheet

Taxable Crypto Trading

Here are the taxable transactions in Canada regarding crypto trading

Non-Taxable Crypto Trading

Here are the non-taxable transactions in Canada regarding crypto trading:

• Buying crypto with FIAT
• Holding cryptocurrency without selling
• Transferring crypto between personal wallets

How Much Taxes do You Pay on Crypto Trading in Canada?

In Canada, profits from crypto trading are taxed according to the personal income tax level for the year.

However, if you’re simply an investor of cryptocurrency and not a professional, only 50% of your capital gains are taxed. Those gains are taxed according to your federal income tax bracket.

Spot Trading Taxes in Canada

Crypto-to-Crypto Trading taxes

Crypto-to-crypto trades are taxable events in Canada, subject to capital gains taxes.

Crypto-to-crypto trades are more difficult to track, but you need to determine the gain on the trade as a function of your FIAT currency (e.g., CAD). Then, 50% of your gain will be taxed in Canada, according to your federal income bracket.

Crypto-to-FIAT Sales Taxes

Crypto-to-FIAT trades are taxed in Canada under capital gains taxes, with your tax rate depending on your federal income tax bracket.

Margin Spot Trading Taxes

Margin trades in Canada are taxed the same as regular spot crypto trading, where you need to determine your profit (when you sell) and pay capital gains taxes.

Day Trading Taxes

Intraday Trading Taxes in Canada

If you trade crypto multiple times a day or in a very short period, you’d probably fall under the scope of a professional investor and be taxed at 100% of your profits instead of being a hobbyist investor (50% of profits).

Scalping Trading Taxes

Scalping involves trading in a very short amount of time, which can be taken as a professional activity, which is taxed at the capital gains level in Canada. In this case, 100% of your profits would be taxed.

Derivatives Trading Taxes

Futures Trading Taxes in Canada

Futures trading in Canada is taxed as spot trading cryptocurrencies, subject to capital gains taxes.

Perpetual Trading Taxes in Canada

Perpetual crypto futures trading is taxed under capital gains taxes in Canada.

Options Trading

Trading cryptocurrency options are taxed the same way as Futures and Perpetual/Spot trading, subject to capital gains taxes.

Canadian NFT Trading Taxes

If you trade NFTs in Canada, you’ll be taxed at a capital gains level, including NFT-to-crypto, NFT-to-NFT, and NFT-to-FIAT trades. In these cases, only 50% of the profits from NFT trading will be taxed according to your federal income tax bracket.

If you create and sell an NFT as a creator, this will be considered income, and 100% of your sales proceeds will be taxed according to your income tax level

Other Trading Taxes

Swing Trading Taxes

Swing trading takes advantage of trends in the market, resulting in short-term and medium-term trades. Swing trading cryptocurrencies will be taxed according to the type of trading you conduct: as a trader or as an investor.

Arbitrage Trading Taxes

Gains from arbitrage trading cryptocurrencies will be taxed depending on whether you’re an investor or trader.

Bot Trading Taxes

Bot trading will be taxed in Canada. It’s likely that you conduct a lot of trades with a bot, and that could be classified as trading instead of investing, which leads to 100% of your gains being taxed.

Copy Trading Taxes

Copy trading will be taxed as regular crypto spot trading, with gains being taxed in Canada, depending on whether you’re a trader or investor.

Margin Trading & Lending Taxes

Leveraged Margin Trading

With leveraged margin, you can make higher gains and losses, but its taxation is the same as with crypto spot trading, with your gains being taxed according to the nature of your activity.

How are Exchange and Network Transfer Fees Taxed?

When you transfer crypto between wallets, you might have to pay transfer fees in crypto. In that case, the payment of the fees is seen as a disposal, the same as selling, and you’d be taxed.

The gain on that amount of crypto used as a transfer fee will be taxed in Canada, even if it’s marginally small. You don’t have the obligation to keep track of these disposals and report the gains from these transfers.

How to Report Crypto Trading on Taxes in Canada?

In Canada, you need to track and report all of your crypto gains/losses and income and include those figures in the right crypto tax forms.

After tracking your crypto transactions for that tax year (between Jan 1 and Dec 31 of each year), you’ll need to determine your gains/losses on each trade and income from crypto-earning activities like airdrops, hard forks, staking, etc.

You’ll need to report your crypto income in your annual Income Tax Return. As for crypto gains, you’ll need to report them on the Schedule 3 (Capital Gains) Form.

Reducing Crypto Trading Taxes in Canada

Here are the top legal ways to reduce your crypto trading taxes in Canada:

HODLing

Simply holding your cryptocurrencies without selling any portion of them enables you to not have any taxable event and not be subject to capital gains taxes.

Charity Donations

In Canada, if you donate cryptocurrencies to qualified charitable organizations, you can deduct those donations and lower their crypto taxes.

TFSA/RRSP

Directing cryptocurrencies to retirement accounts like TFSA/RRSP offers tax advantages for those crypto gains and effectively enables you to lower your crypto taxes.

Good Record Keeping to Make Sure Accurate Cost-Basis

Investors in Canada have to prove their gains, with investors having to keep accurate track of all their trades, from cost basis to sales proceeds.

How to easily calculate crypto trading taxes for Canada?

Here’s how to calculate your crypto trading taxes for Canada:

1.  Import your crypto trades: With CoinTracking, you have hundreds of options to import your crypto trades from popular exchanges/wallets to blockchain networks. In Canada, you must track your crypto trades, while importing them via CSV or API with CoinTracking is one of the easiest ways.

2. We calculate your gains/losses: Crypto tax software like CoinTracking can automatically determine the gains/losses from all of your imported crypto trades as the second step in your crypto tax journey.

3. Generate tax reports with the right accounting method: The final step to do your crypto taxes is to generate tax reports with all of your gains/losses and income according to the accepted accounting method in Canada, ACB.

Crypto Trading Taxes in Other Countries

Crypto Trading Taxes in the US

Crypto trading is taxed in the US at a capital gains level, with profits being taxed according to their holding period. Capital gains taxes can be short-term and long-term ones, ranging from 0% to 37%, depending on the holding period. Discover everything in our US crypto taxes guide.

Crypto trading taxes in Australia

In Australia, crypto trades are taxable events, subject to capital gains taxes, with your tax rate depending on your income tax level. Read more about our crypto tax guide in Australia.

Crypto trading taxes in the UK

The UK taxes cryptocurrencies, with profits from crypto trading being taxed at capital gains taxes, depending on their income tax level bracket. Discover more about how the UK taxes crypto.