Cryptocurrency is treated as a commodity for Canadian tax purposes, not as currency. Every time you dispose of it, you have a taxable event, in the same way you would selling a stock or a piece of property. The complication is that "dispose" covers far more than "sell for Canadian dollars".
This guide explains the general framework. Crypto tax gets genuinely complicated at the edges — staking, DeFi, lending, NFTs, mining at scale — and if your activity goes beyond straightforward buying and selling, this is an area where paying an accountant who knows the space is worth the money.
Capital gain or business income?
This is the first and most consequential question, because it changes your tax bill by roughly a factor of two.
- If your activity is on capital account, only 50% of the gain is included in your taxable income. That taxable half is then taxed at your marginal rate.
- If it is business income, 100% is included and taxed at your marginal rate.
The CRA decides this on the facts, not on what you call it. Factors that push toward business income include: high frequency of transactions, short holding periods, promoting the activity, financing purchases with borrowed money, specialised knowledge of the market, and an intention to profit from short-term price movement rather than to hold. Mining is generally treated as business income; so is running a trading operation.
The classification is not a choice you make once and keep. You cannot report gains as capital and losses as business income, and the CRA can reassess a classification. Be consistent, and be able to explain the basis for your treatment.
What counts as a disposition
This is where most Canadians get caught, because several of these do not feel like sales:
- Selling crypto for Canadian dollars. Obviously.
- Trading one cryptocurrency for another. Swapping Bitcoin for Ethereum is a disposition of the Bitcoin at its fair market value in CAD at that moment. Even though no fiat was involved, you have a realised gain or loss. This is the single most commonly missed event.
- Using crypto to buy goods or services. Paying for something with crypto is a disposition at fair market value.
- Gifting crypto. Also a disposition at fair market value.
- Converting to a stablecoin. A stablecoin is still property, not cash — so this is a crypto-to-crypto trade and a disposition.
Not dispositions: buying crypto with Canadian dollars, holding it however long, and moving it between wallets you control. Transfers between your own wallets are not taxable events, though you should keep records showing they were internal transfers.
Working out the gain: adjusted cost base
Your gain is proceeds minus your adjusted cost base (ACB) minus costs of disposition. For identical properties — and every unit of the same coin is identical — Canada requires the average cost method. You cannot pick which specific coins you sold.
So if you buy 1 BTC at $40,000 and later 1 BTC at $60,000, your ACB is $50,000 per BTC. Selling one for $70,000 gives a $20,000 gain, of which $10,000 is taxable, taxed at your marginal rate. Note that this differs from the specific-identification methods permitted in some other countries — if you are using software or advice built for a US audience, check that it is applying the average cost rule.
Transaction fees generally form part of your cost base on acquisition and reduce proceeds on disposition. Everything must be converted to Canadian dollars at the exchange rate on the date of each transaction, even if the trade never touched CAD.
Other events worth knowing
- Mining. Generally business income, valued at fair market value when the coins are received. That value also becomes the cost base for a later disposition.
- Staking rewards. The treatment is not as settled as anyone selling you software will imply. The common approach is to treat rewards as income when received, at fair market value, which then becomes the cost base. Depending on the scale and nature of your activity the treatment may differ. This is an area to get advice on rather than to guess.
- Airdrops and forks. Treatment depends on the circumstances and is not uniformly settled. Keep records of the date received and the fair market value at that time regardless of how you ultimately report it.
- Losses. Capital losses can be applied against capital gains — in the current year, carried back up to three years, or carried forward indefinitely. They cannot generally be applied against ordinary income. Be aware of the superficial loss rule: if you or an affiliated person reacquires the same property within 30 days before or after the sale and still holds it at the end of that window, the loss is denied and added to the cost base instead.
Record keeping
The CRA expects you to keep records supporting every transaction. Practically, that means for each event: the date, what you did, the CAD value at that time, the exchange rate used and its source, the counterparty or exchange, wallet addresses, and the fees. Keep them for at least six years.
Two hard-won practical points. First, export your transaction history regularly. Exchanges close, get acquired, restrict access, or lose historical data, and reconstructing years of trades from block explorers is grim work. Second, if you have traded across several exchanges and wallets, reconciliation software is worth the cost — but check that it applies Canadian average-cost ACB rather than a US method, because many popular tools default to the latter.
Reporting
Capital gains and losses are reported on Schedule 3 of your T1 return. Business income goes on form T2125. If you hold specified foreign property with a total cost over $100,000 — which can include crypto held on some non-Canadian platforms — you may also need to file form T1135. The rules on when crypto counts as specified foreign property depend on where and how it is held, and getting this wrong carries meaningful penalties, so check your specific situation.
The CRA has obtained customer data from crypto exchanges and has an active compliance program in this area. Reporting is not optional, and voluntary correction of past errors is generally treated far better than being found.
A worked example
You bought 2 ETH for $6,000 total (ACB $3,000 each). Eighteen months later you traded 1 ETH for some other token when ETH was worth $5,000.
- Proceeds: $5,000 (fair market value in CAD at the time of the trade).
- ACB: $3,000.
- Capital gain: $2,000.
- Taxable capital gain at 50% inclusion: $1,000.
- At a 30% marginal rate, tax owed: $300.
No Canadian dollars were involved at any point, and you may well still be holding the token you received. You still owe the $300. That mismatch — a tax bill with no cash to pay it — is exactly what makes an active trading year painful if you have not set money aside.
Our crypto capital gains calculator applies the 50% inclusion rate and your marginal rate to work out the tax on a disposition. It handles the straightforward capital-gains case; it does not attempt to classify your activity or reconcile a multi-exchange history, and it is not a substitute for advice if your situation is at all complex.
Frequently asked questions
Is cryptocurrency taxed in Canada?
Yes. The CRA treats cryptocurrency as a commodity, so disposing of it creates a taxable event. Depending on the nature of your activity, gains are taxed either as capital gains, where 50% is included in income, or as business income, where 100% is included.
Do I pay tax when I trade one crypto for another?
Yes. Trading one cryptocurrency for another is a disposition of the first at its fair market value in Canadian dollars at that moment, even though no fiat was involved. This is the most commonly missed taxable event.
Is moving crypto between my own wallets taxable?
No. Transfers between wallets you control are not dispositions and are not taxable. Keep records showing the transfer was internal.
How do I calculate my adjusted cost base for crypto?
Canada requires the average cost method for identical properties. Add the total cost of all units of a coin, including acquisition fees, and divide by the number of units held. You cannot choose which specific units you sold.
What if I lost money on crypto?
Capital losses can be applied against capital gains in the current year, carried back up to three years, or carried forward indefinitely. They generally cannot be applied against ordinary income. Watch the superficial loss rule if you repurchase the same asset within 30 days.
Sources
- Canada Revenue Agency — Information for crypto-asset users and tax professionals — Classification, dispositions, record keeping
- Canada Revenue Agency — Capital gains — Inclusion rate, adjusted cost base, superficial loss rule
- Canada Revenue Agency — Foreign income verification statement (T1135) — Specified foreign property reporting threshold
Written by the Calcova team and last checked against the sources above on 9 September 2026. This is general information about how the rules work, not personal tax or financial advice — see our disclaimer.
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