Families guide
Crypto and tax in Canada: what triggers tax and how to report it
You did not cash out, so you think there is nothing to report. In Canada, trading one coin for another, or paying for something with crypto, is a taxable event. Here is how it works and how to put it right.
How the CRA sees crypto
Crypto is not money as far as the tax system is concerned. The CRA treats paying for something with crypto as a barter transaction: you gave up one thing of value to get another. Every transaction is measured at its fair market value in Canadian dollars at that moment.
The CRA asks you to use a reasonable method for valuing transactions, apply it consistently and keep a note of what you used.
- Buying crypto with Canadian dollars
- Holding it, whatever the price does
- Moving it between your own wallets
- Selling for dollars
- Trading one crypto-asset for another
- Paying for goods or services with it
- Giving it away
- Mining as a business
- Being paid in crypto for work
- Rewards: ask us how yours are treated
Capital gain or business income
This decides whether half or all of your profit is taxed. The CRA looks at behaviour, not labels. It is more likely to be business income if you trade with regularity, in a trader-like way, with the purpose of profiting from the trading itself. Even a single transaction can be business income if it is an adventure in the nature of trade.
Someone who buys a few times a year and holds is usually on capital account. Someone who trades daily, uses leverage or runs bots usually is not. Many people sit in between, and the answer should be decided once and applied consistently.
Working out the gain: adjusted cost base
Canada uses an average cost. Each crypto-asset is tracked separately.
Say you buy 10 units for CAD 10,000, then another 10 for CAD 20,000. You own 20 units at an average cost of CAD 1,500. You sell 5 for CAD 15,000. Your cost for those 5 is CAD 7,500, so the gain is CAD 7,500 and the taxable half is CAD 3,750. At CAD 100,000 of other income in Ontario, the tax is about CAD 1,181.
Fees are part of the calculation. The superficial loss rule applies too: sell at a loss and buy the same asset back within 30 days and the loss is denied for now.
- 1Total costCAD 30,000 for 20 units, including fees.
- 2Average costCAD 1,500 a unit.
- 3Sale5 units for CAD 15,000.
- 4GainCAD 15,000 less CAD 7,500 = CAD 7,500.
- 5TaxableHalf: CAD 3,750 added to income.
The records the CRA expects
- The date of every purchase, sale, trade and transfer
- The value in Canadian dollars at the time, and how you got it
- Exchange trade ledgers and transfer records
- Wallet addresses you control
- Receipts for costs: accounting, legal and software fees
Keep them for at least six years from the end of the tax year. Export your account history regularly. If an exchange closes or locks you out, the tax is still owed and the proof is gone.
Foreign platforms and Form T1135
Crypto held on a platform outside Canada may count as specified foreign property. If the total cost of all your foreign property is more than CAD 100,000 at any time in the year, Form T1135 is required. Whether your holdings count depends on where and how they are held. Ask before assuming either way.
If you have never reported it
This is common, and it is fixable. The usual path is to rebuild the history from exchange exports and wallet records, work out the gain or loss for each year, and correct the returns. Coming forward before the CRA contacts you generally puts you in a far better position than waiting.
Do not guess the numbers and do not ignore a letter. Bring us what you have.
Worked examples
Illustrations built from the kinds of situations we see. They are not client files, and the numbers are simplified.
Never cashed out
- The situation
- An investor swapped one coin for another a dozen times over two years and never converted to dollars, so reported nothing.
- The move
- Rebuild each swap at its Canadian dollar value on the day, compute the gain or loss on each, and correct both years.
- What it changes
- The returns now match the exchange records, and losses in the second year are on file to offset future gains.
The weekend trader
- The situation
- A salaried employee makes several hundred trades a year and reports half the profit as capital gains.
- The move
- Review the activity against the CRA's factors and decide the treatment before filing, not after a review.
- What it changes
- One position, applied every year and documented. If it is business income, related costs become deductible.
The exchange that disappeared
- The situation
- A platform stopped operating and the account history went with it.
- The move
- Reconstruct from bank transfers, emails and wallet records, and set up regular exports for the accounts that remain.
- What it changes
- A defensible record, and no repeat.
Mistakes to avoid
- Believing tax applies only when crypto is converted to dollars.
- Ignoring coin-to-coin trades.
- Using first-in, first-out. Canada uses average cost for identical assets.
- Keeping no records and relying on the exchange to exist forever.
- Calling frequent trading an investment to halve the tax.
- Forgetting that a business accepting crypto owes GST/HST on its value at the time.
Your checklist
Tick as you go. Your progress is saved on this device.
Tools for this job
Who does what
What The Accounting Doc does
- Rebuild transaction histories and compute gains and losses
- Decide and document capital or business treatment with you
- Correct earlier returns
- Handle foreign reporting
Who else you need
- Licensed investment adviser
- Whether crypto belongs in your portfolio at all. We do not give investment advice.
- Tax lawyer
- If the CRA has already opened a review or the amounts are large.
Sources
- Canada Revenue Agency, Information for crypto-asset users and tax professionals
- Prime Minister of Canada, statement cancelling the proposed capital gains inclusion rate increase, 21 March 2025
- Canada Revenue Agency, Foreign Income Verification Statement (Form T1135)
- Canada Revenue Agency, T4032-ON Payroll Deductions Tables, Ontario, effective 1 January 2026
Figures checked on 13 November 2026. Tax rules change and your facts matter: this guide is education, not advice for your situation. We do not give legal, immigration or investment advice.