The Canada Revenue Agency (CRA) treats cryptocurrency as a commodity, not currency. That means most crypto activity is taxed as capital gains or business income, depending on how much you trade. This guide covers what’s taxable, the 50% inclusion rate, and the business-vs-capital distinction.
What Is Taxable in Canada
| Event | Taxable? | Type |
|---|---|---|
| Sell crypto for CAD | Yes | Capital gain/loss (usually) |
| Trade crypto for crypto | Yes | Capital gain/loss |
| Spend crypto on goods | Yes | Capital gain/loss |
| Mining rewards | Yes | Business income |
| Staking rewards | Yes | Business income (usually) |
| Airdrops | Yes | Income |
| Gift to spouse | No | Tax-free between spouses |
| Donate to charity | No | No capital gains tax |
| Gift to non-spouse | Yes | Deemed disposition at FMV |
There’s no minimum reporting threshold. A gain of $50 from selling an old NFT is still reportable if it’s a capital gain.
Tax Rates
Capital Gains
50% of capital gains are included in taxable income (50% inclusion rate).
For example: if you have $10,000 in capital gains:
- $5,000 is included in your income
- You pay tax at your marginal tax rate on that $5,000
For a taxpayer in a 40% combined federal-provincial bracket, that’s $2,000 on a $10,000 gain — an effective 20% rate. The 2024 Budget proposed raising the inclusion rate to two-thirds for gains over $250,000, but that measure was scrapped after Parliament was prorogued in January 2025, and the CRA confirmed the 50% rate continues to apply.
Marginal Tax Rates (Provincial + Federal)
| Income Bracket | Approximate Rate |
|---|---|
| Up to $55,867 | 20-25% |
| $55,867 - $111,733 | 30-35% |
| $111,733 - $173,205 | 37-43% |
| Over $173,205 | 47-53% |
High earners should also keep the alternative minimum tax (AMT) in mind: large capital gains in a single year can trigger it, and the 2024 AMT changes widened its reach.
The “Business vs Capital” Distinction
Capital gains: buying and holding crypto, occasional selling. 50% inclusion rate.
Business income: frequent trading, day trading, running a node or validator. 100% included as income — you pay full marginal rates, and CPP contributions may apply.
CRA factors to consider:
- Frequency of transactions
- Length of holding period
- Knowledge of crypto markets
- Intention to profit from short-term price movements
- Whether you’ve advertised yourself as a trader
The line is blurry. An investor who rebalances a portfolio a few times a year is usually capital; someone buying and selling daily is usually business. If you’re on the fence, treating borderline trading as business income is the safer default — the CRA leans that way, and the penalty for under-reporting outweighs the tax saved.
Cost Basis: Adjusted Cost Base (ACB)
Canada uses the adjusted cost base (ACB) method — an average cost across all your holdings of the same coin, on all exchanges and wallets. You can’t use FIFO or cherry-pick your cheapest units.
ACB example. Buy 1 BTC at $50,000, then another 1 BTC at $70,000. ACB = $60,000 per BTC. Sell 1 BTC for $90,000:
- Gain: $90,000 − $60,000 = $30,000
- 50% included in income: $15,000 taxable
Fees to acquire crypto are added to your ACB; fees to dispose are deducted from proceeds. Both reduce your gain, so track them.
The Superficial Loss Rule
CRA rules deny a capital loss if you repurchase the same or identical asset within 30 days before or after the sale. This applies to crypto. So if you sell BTC at a loss on 1 May and buy it back on 20 May, the loss is denied — you can’t crystallise losses you didn’t really realise. Wait at least 31 days, or accept the loss being added back.
Mining, Staking, and Airdrops
The CRA generally treats mining and staking rewards as income when received, valued in CAD at that moment. Running a node or validator with a real profit expectation is business income; occasional rewards from a few coins are borderline. Hobby mining is reported as other income, while a commercial mining operation uses business forms (T2125) and can deduct costs. Whatever the classification, selling the rewards later is a separate capital gain.
Record Keeping
The CRA requires detailed records:
- Transaction date and time
- Fair market value in CAD at time of transaction (use Bank of Canada rates)
- Purpose of the transaction
- Exchange or wallet used
- Transaction fees paid
Reporting threshold: any crypto transaction that results in a capital gain or loss must be reported — there’s no minimum threshold.
Report capital gains on Schedule 3 and business income on T2125. Keep records for six years after filing — that’s the CRA’s audit window.
Common Mistakes
- Using a foreign-currency cost basis — everything must be converted to CAD at the time of each transaction.
- Ignoring ACB averaging — mixing FIFO thinking into a pooled system produces wrong gains.
- Missing the superficial loss rule — buybacks within 30 days void the loss.
- Not reporting small gains — there’s no threshold, and the CRA’s exchange data matching makes unreported transactions findable.
Verdict
Canada’s crypto tax rules are generally clear. The 50% capital gains inclusion rate is favorable compared to many countries, and the ACB system is manageable with good records. Use crypto tax software (Koinly, CoinTracker) that supports Canadian cost-basis methods, and always convert everything to CAD.
Related: Crypto Tax Guide by Country | How to Report Crypto Losses | Staking, Airdrops, DeFi Tax
Bottom line for Canadian crypto users
Canada’s 50% capital gains inclusion rate is one of the more favourable in the developed world. The key is staying on the right side of the CRA: use the adjusted cost base method, report every transaction regardless of size, and watch the superficial loss rule if you are selling and rebuying quickly. If your trading activity is frequent enough to look like a business, the CRA may reclassify your gains as 100% taxable business income — so treat borderline cases conservatively.
Compliance checklist for Canadian crypto holders
Start by gathering all transaction records from every exchange and wallet you have used. Calculate your adjusted cost base for each coin across all platforms. Report capital gains on Schedule 3 and business income on T2125 if you qualify as a trader. Keep your records for six years — that is the CRA’s audit window. If you have not been reporting crypto in previous years, consider consulting a tax professional about voluntary disclosure before the CRA contacts you. Use crypto tax software that supports the Canadian ACB method, and convert every figure to CAD at the time of each transaction using Bank of Canada rates.
Common questions from Canadian crypto users
The CRA treats crypto as a commodity, so buying crypto with CAD is not itself a taxable event — only disposing of it triggers a gain or loss. A small NFT sale still counts as a capital gain or loss with no minimum threshold. If you mine crypto as a hobby, you report it as other income, while commercial mining operations file T2125 and can deduct hardware, electricity, and other expenses. The 2024 Budget proposed raising the inclusion rate to two-thirds for gains over $250,000, but that measure was scrapped after Parliament was prorogued in January 2025, and the CRA confirmed the 50% rate continues. Gifts to a spouse are tax-free, but gifts to non-spouses are deemed dispositions at fair market value.
Further reading on Canadian crypto rules
The CRA’s Information Bulletin on cryptocurrency taxation provides the official position. The Adjusted Cost Base guidance explains how to calculate your pooled cost across exchanges. For a cross-jurisdiction comparison, the Crypto Tax Guide by Country on this site puts Canada’s rules alongside the UK, Australia, and the US. The Staking, Airdrops, DeFi article covers how these specific events are taxed in Canada.