Crypto Tax in Canada
Tax authority: CRA (Canada Revenue Agency) · Last updated: 2026
Canada takes a pragmatic but strict approach to crypto taxation. The CRA classifies cryptocurrency as a commodity, meaning crypto transactions are subject to either capital gains tax or business income tax depending on your activity level. Unlike some countries, there is no holding period discount — but only 50% of capital gains are included in your taxable income, making it relatively favorable for long-term holders.
Overview
| Classification | Commodity (for most individuals) |
| Capital Gains Tax | 50% of gains included in income (taxed at marginal rate). 66.7% inclusion for gains over $250,000 |
| Holding Period | No reduced rate for holding period |
| Cost Basis Method | Adjusted Cost Base (ACB) |
| Reporting Forms | T1 General, Schedule 3 (Capital Gains) |
Key Rules
- •50% of capital gains are taxable (66.7% above $250k as of 2024)
- •Must use Adjusted Cost Base (ACB) method
- •CRA treats crypto as a commodity, not currency
- •Trading crypto-to-crypto is a taxable disposition
- •Mining and staking can be business income or hobby
Taxable Events
- !Selling crypto for CAD or any fiat currency
- !Trading one crypto for another (e.g., BTC to ETH)
- !Using crypto to pay for goods or services
- !Gifting crypto (deemed disposition at fair market value)
- !Receiving crypto as payment for services (business income)
- !Mining or staking rewards (income at receipt, then CGT on later sale)
Not Taxable
- ✓Buying crypto with CAD and holding it
- ✓Transferring crypto between your own wallets
- ✓Donating crypto to a registered charity (may receive a tax credit)
Tax Rates
| Income Bracket | Rate | Note |
|---|---|---|
| $0 – $55,867 | 15% | Federal rate only |
| $55,867 – $111,733 | 20.5% | |
| $111,733 – $154,906 | 26% | |
| $154,906 – $220,000 | 29% | |
| $220,000+ | 33% | Plus provincial tax (5-21%) |
Common Scenarios
Capital gains vs business income
The CRA looks at factors like trading frequency, holding period, knowledge of markets, and whether you promote trading activity. If classified as business income, 100% of profits are taxable. Most casual investors are capital gains, but active day traders may be classified as business. The distinction matters — capital gains has a 50% inclusion rate, business income does not.
Adjusted Cost Base (ACB)
Canada requires the ACB method for calculating cost basis. Your ACB is the average cost of all units of a particular crypto you own. When you buy more, the ACB is recalculated. You cannot use FIFO, LIFO, or specific identification in Canada — only ACB. This makes tracking essential, as every purchase changes your cost base.
Crypto-to-crypto trades
Swapping Bitcoin for Ethereum is a taxable event in Canada. The CRA treats it as selling BTC at fair market value (triggering a gain/loss) and buying ETH at that same value. This catches many Canadians off guard, especially DeFi users who make many token swaps.
Mining and staking
Whether mining/staking income is business or hobby depends on scale, regularity, and infrastructure investment. Hobby income is reported on Line 13000, business income requires a T2125. The crypto received is income at fair market value when received, and a later sale creates a separate capital gain or loss.
Best Crypto Tax Software for Canada
Frequently Asked Questions
- What is the capital gains inclusion rate in Canada?
- For individuals, 50% of capital gains are included in your taxable income for gains up to $250,000 per year. Above $250,000, the inclusion rate increases to 66.7% (as of the 2024 tax year). For corporations, the 66.7% inclusion rate applies to all capital gains.
- Can I use FIFO in Canada?
- No. Canada requires the Adjusted Cost Base (ACB) method. ACB calculates the weighted average cost of all units of a particular crypto. You cannot choose FIFO, LIFO, or specific identification. Make sure your crypto tax software supports ACB — most popular tools like Koinly and CoinLedger do.
- Does the CRA track crypto?
- Yes. Canadian exchanges are required to report to the CRA. The CRA has also participated in international information-sharing agreements and has sent questionnaires to known crypto holders. They have publicly stated that crypto compliance is an audit priority.
- Are crypto gifts taxable?
- Yes. Gifting crypto is a deemed disposition at fair market value. The person giving the gift reports any capital gain. The recipient's cost base becomes the fair market value at the time of the gift. Donations to registered charities may qualify for a donation tax credit.
- Do I report crypto on my T1?
- Capital gains from crypto go on Schedule 3 (Capital Gains and Losses). If you have business income from crypto, use Form T2125 (Statement of Business Activities). Both flow into your T1 General tax return. You must also answer the digital asset question on your T1.
Disclaimer: This guide is for informational purposes only and does not constitute tax advice. Crypto tax rules change frequently. Consult a qualified tax professional in Canada for advice specific to your situation.