Is cryptocurrency taxable in canada

Under the guidance produced by the CRA, taxable events occur upon the disposition of any cryptocurrency. In general, common crypto dispositions that would be considered as taxable events include: Paying for goods and services using cryptocurrency. Selling crypto assets Trading one cryptocurrency for another including swaps, exchanges and peer-to-peer trades Cashing out cryptocurrencies into fiat currency Gifting crypto assets to friends, family or work colleagues This definition only views crypto transactions as taxable events, and there are no tax requirements for simply holding crypto.

In short, the Income Tax Act holds that any bartered transactions , like the disposition of cryptocurrencies, will have income tax implications. Under this definition, crypto transactions can be treated as either business income or capital gain, depending on the type of transaction. Business Income Taxable business income is crypto income earned as part of a business operation.

How does the CRA view cryptocurrency? The CRA subsequently issued a guide explaining that, for tax purposes, it generally treats crypto as a commodity, like oil or gold. As such, any earnings from transactions involving cryptocurrency are generally treated as business income or as a capital gain , depending on the circumstances. And if you lost money on crypto, you might be able to claim a loss—but more on that below.

When is crypto considered business income? The amount of income is determined based on the fair market value of the cryptocurrency on the day s when you received payment. If you mine cryptocurrency, this could be considered a business or a hobby, depending on the nature of your activity—the CRA decides on a case-by-case basis.

Staking crypto may also have tax implications. How is crypto taxed in Canada? As is the case with other types of capital investments, you only report gains or losses in the tax year that you dispose of them—in other words, when you cash out or trade your holdings. Same goes if you send crypto from one exchange to another, assuming both wallets are yours. All other crypto transactions, including trading one cryptocurrency for another, cashing out your coins, buying goods or services, or gifting crypto to charity, friends or family, are taxable events.

Any increase in the value of your crypto between the time you got it and when you disposed of it is a capital gain or business income, as explained above ; any decrease in value is a capital loss or business income loss. As for crypto ETFs, which hold either crypto coins or shares of cryptocurrency-related companies, they follow the taxation rules for securities.

Crypto record-keeping tips You must keep detailed records of all your crypto activity for six years, as the CRA can request to see them at any time. For each transaction, include a date and description e.

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