Cryptocurrency taxes in Canada are mandatory for all digital asset holders. Whether you’re trading Bitcoin, staking Ethereum, or mining Solana, the CRA requires you to report every taxable transaction. Here’s everything you need to know about crypto taxes in 2025.
How Does the CRA Tax Cryptocurrency in Canada?
The Canada Revenue Agency doesn’t treat cryptocurrency as legal tender. Instead, the CRA classifies digital assets as commodities under the Income Tax Act, applying existing property and business tax rules to all crypto transactions.
Your crypto activities fall into one of two categories:
- Capital Gains: If you’re buying and holding cryptocurrency as an investment, only 50% of your profits are taxable
- Business Income: If you’re actively trading, mining, or operating crypto-related businesses, 100% of your profits are fully taxable at your regular income tax rate
The distinction matters significantly. A $10,000 profit treated as a capital gain means only $5,000 is taxable, while the same profit classified as business income is fully taxable at your marginal rate—potentially costing you thousands more.
Capital Gains vs. Business Income: What’s the Difference?
The CRA evaluates several factors to determine whether your crypto activity generates capital gains or business income:
You’re Likely an Investor (Capital Gains) If:
- You hold cryptocurrencies for extended periods
- You make infrequent trades
- You don’t spend significant time managing your portfolio
- You have other primary sources of income
- You’re holding crypto as a long-term store of value
You’re Likely Operating a Business (Business Income) If:
- You trade cryptocurrencies frequently throughout the day
- You operate mining rigs for profit
- You run a crypto-related business
- You derive your primary income from crypto activities
- You use sophisticated trading strategies and tools
Not sure which category applies to you? Contact CryptoExperts for personalized guidance on your specific situation.
Taxable Crypto Events in Canada
Understanding what triggers a tax event is crucial. Here are the transactions the CRA requires you to report:
Dispositions (Capital Gains Events)
- Selling crypto for Canadian dollars: Converting Bitcoin to CAD triggers a taxable event
- Trading one cryptocurrency for another: Swapping Ethereum for Solana is a disposition requiring tax reporting
- Spending crypto on goods or services: Using Bitcoin to purchase items creates a taxable event
- Gifting cryptocurrency: Giving crypto to someone else is considered a disposition at fair market value
Income Events (Fully Taxable)
- Mining rewards: Cryptocurrency you mine is taxed as income at its fair market value when received
- Staking rewards: Tokens earned through staking are taxable as income
- Airdrops: Free tokens distributed to your wallet are taxable as income
- Getting paid in crypto: Receiving cryptocurrency as payment for work is fully taxable income
Non-Taxable Activities
Not every crypto action triggers taxes:
- Buying crypto with Canadian dollars: Simply purchasing Bitcoin with CAD isn’t taxable until you sell or trade it
- Transferring between your own wallets: Moving crypto from one wallet you control to another isn’t taxable (but keep records to prove ownership)
- Holding cryptocurrency: Simply holding your investment generates no tax liability
How to Calculate Your Crypto Taxes
Calculating crypto taxes requires tracking three key numbers:
Step 1: Determine Your Adjusted Cost Base (ACB)
Your ACB is what you originally paid for the cryptocurrency, including all transaction fees and costs. Canada requires the average cost basis method for calculating ACB.
Example: You bought 2 BTC at $40,000 each ($80,000 total) and later bought 1 BTC at $50,000. Your average cost base is ($80,000 + $50,000) ÷ 3 = $43,333.33 per Bitcoin.
Step 2: Calculate Your Proceeds
Your proceeds are the Canadian dollar value of what you received when disposing of the cryptocurrency. Use the fair market value at the time of the transaction.
Step 3: Calculate Gain or Loss
Capital Gain/Loss = Proceeds – Adjusted Cost Base – Transaction Fees
If you sold that Bitcoin for $55,000, your calculation would be:
$55,000 (proceeds) – $43,333.33 (ACB) – $100 (fees) = $11,566.67 capital gain
Since only 50% of capital gains are taxable, you’d report $5,783.34 as taxable income.
2025 Federal Tax Brackets for Crypto
Your crypto gains are taxed at the same rates as other income. For 2025, federal tax brackets are:
- 15% on income up to $55,867
- 20.5% on income between $55,867 and $111,733
- 26% on income between $111,733 and $173,205
- 29% on income between $173,205 and $246,752
- 33% on income over $246,752
Note: Provincial taxes apply on top of federal rates, varying from 10-21% depending on your province.
Important CRA Rules for 2025
The Superficial Loss Rule
You cannot claim a capital loss if you buy the same cryptocurrency within 30 days before or after selling it. This prevents tax-loss harvesting strategies common in traditional markets.
Example: If you sell Bitcoin at a loss on January 15th and buy it back on January 20th, you cannot claim that loss on your taxes.
Form T1135: Foreign Property Reporting
If the total cost of your foreign cryptocurrency holdings exceeds $100,000 CAD at any time during the year, you must file Form T1135. This includes crypto held on foreign exchanges or in foreign wallets.
Record-Keeping Requirements
The CRA requires you to maintain detailed records for at least six years, including:
- Date and time of each transaction
- Type of transaction (buy, sell, trade, transfer)
- Fair market value in Canadian dollars at transaction time
- Wallet addresses involved
- Exchange or platform used
- Transaction fees paid
- Purpose of the transaction
Special Situations and Tax Treatment
Crypto Mining in Canada
Mining is typically considered business income, meaning 100% of the value of mined coins is taxable when received. However, you can deduct business expenses including:
- Electricity costs
- Mining equipment (through Capital Cost Allowance)
- Internet and hosting fees
- Maintenance and repairs
Mining equipment falls under CCA Class 50, allowing 30% declining balance depreciation annually.
Staking Rewards
The CRA confirmed in 2025 that depositing cryptocurrency for staking doesn’t trigger a disposition if you retain beneficial ownership. However, staking rewards must be included in taxable income when received, using either the cash or accrual method depending on your situation.
DeFi and NFT Transactions
While specific DeFi guidance remains limited, the CRA applies existing principles:
- Trading NFTs likely triggers capital gains or business income
- DeFi token swaps are treated as crypto-to-crypto trades
- Yield farming rewards are taxable as income
- Liquidity pool deposits may be dispositions
Lost or Stolen Cryptocurrency
Though the CRA hasn’t issued specific guidance, you can likely deduct losses from capital property in cases of theft. Document the incident thoroughly with:
- Police reports (if applicable)
- Exchange notifications
- Blockchain transaction records
- Communication with the platform
How to Report Crypto Taxes
Canadian crypto holders file taxes using standard forms:
For Capital Gains/Losses:
- Use Schedule 3 (Capital Gains and Losses) of your T1 tax return
- Report crypto-assets under “other property”
- Include all dispositions for the tax year
For Business Income:
- Report using Form T2125 (Statement of Business Activities) for sole proprietors
- Include all revenue and deductible expenses
- Corporate entities use T2 corporate tax returns
Tax Filing Deadline
The 2025 tax season deadline is April 30, 2026 for most Canadians. Self-employed individuals have until June 15, 2026, though any taxes owed are still due April 30th.
Enhanced CRA Enforcement in 2025
The CRA has significantly increased crypto tax enforcement:
- Exchange data sharing: The CRA obtains transaction records from major Canadian and international exchanges
- CARF implementation pending: New Crypto-Asset Reporting Framework will require crypto service providers to report client information directly to the CRA
- Audit activity: Over 20,000 crypto-related accounts have been audited since 2022
- International cooperation: Data-sharing agreements help trace undisclosed gains on foreign platforms
Failing to report crypto income can result in:
- Reassessments going back several years
- Interest charges on unpaid taxes
- Penalties ranging from 5-10% of unreported income
- Potential prosecution for tax evasion in serious cases
Strategies to Minimize Your Crypto Tax Burden (Legally)
While you can’t avoid taxes, you can optimize your tax situation:
1. Use Capital Losses to Offset Gains
Sell underperforming assets to realize capital losses, which can offset 50% of capital gains. Remember the 30-day superficial loss rule if you plan to repurchase.
2. Time Your Transactions Strategically
Consider the timing of large dispositions across tax years to stay in lower tax brackets.
3. Maintain Meticulous Records
Accurate record-keeping ensures you can prove your adjusted cost base and avoid paying more tax than necessary.
4. Consider Professional Guidance
Complex crypto portfolios benefit from professional tax guidance. Our team at CryptoExperts in Toronto, Windsor, and London provides comprehensive crypto tax consulting to help you navigate CRA requirements.
5. Use Crypto Tax Software
Specialized software can automatically import transactions, calculate gains/losses using the average cost basis method, and generate CRA-compliant reports.
Common Crypto Tax Mistakes to Avoid
- Not reporting crypto-to-crypto trades: Many assume only crypto-to-fiat sales are taxable. Every trade is a disposition.
- Forgetting about airdrops and staking rewards: All crypto income is taxable, even “free” tokens.
- Poor record-keeping: Without proper documentation, you can’t accurately calculate your adjusted cost base.
- Misclassifying business income as capital gains: Frequent traders risk CRA reclassification and additional taxes owed.
- Not reporting foreign holdings over $100,000: Form T1135 is mandatory and penalties for non-compliance are severe.
Get Expert Crypto Tax Guidance
Cryptocurrency taxation is complex and constantly evolving. Whether you’re buying Bitcoin, purchasing Ethereum, trading Solana, or investing in XRP, understanding your tax obligations is essential for remaining compliant with CRA regulations.
At CryptoExperts, we provide comprehensive crypto consulting services including tax guidance tailored to Canadian regulations. Our FINTRAC-regulated brokerage firm offers personalized support to help you navigate the complexities of cryptocurrency taxation, from calculating your adjusted cost base to understanding reporting requirements.
Book a free consultation today by visiting CryptoExperts.ca or calling 519-996-7471. Our team of experienced crypto consultants is ready to help you optimize your tax strategy while maintaining full CRA compliance.
Disclaimer: This article provides general information about cryptocurrency taxation in Canada and should not be considered professional tax advice. Tax laws are complex and subject to change. Always consult with a qualified tax professional or accountant regarding your specific situation. CryptoExperts provides guidance and education on cryptocurrency matters but does not offer investment advice.
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