Cryptocurrency Taxes in Canada 2025: A Complete Guide to Understanding Crypto Taxation

Cryptocurrency is becoming increasingly popular as an investment, much like stocks and day trading. While it has yet to become a primary form of currency, its value can be significant. Just like traditional investments, cryptocurrency transactions in Canada are subject to taxation. However, unlike regular income, cryptocurrency is classified as a capital asset, meaning most transactions are taxed under capital gains rules unless they are considered business income.

Understanding Cryptocurrency Tax Regulations in Canada

The Canada Revenue Agency (CRA) has specific guidelines on how cryptocurrency transactions are taxed. In general:

• 50% of capital gains are taxable, meaning you only pay tax on half of your crypto earnings.
• Crypto-related business income is fully taxable at federal and provincial tax rates.
• Certain transactions are not taxable, such as:
  • Holding crypto assets
  • Receiving crypto as a gift
  • Moving crypto between wallets
  • Creating a Decentralized Autonomous Organization (DAO)
  • Purchasing crypto with fiat currency

Canada Capital Gains Tax 2025-2026: Major Changes, New Rates & What It Means for You

Vacant Home Tax in Toronto: 2025 Updates and Key Details

Essential Tax Deductions, Credits, and Write-Offs for 2025: Maximizing Your Tax Savings in Canada

Smart Strategies to Avoid or Reduce Capital Gains Tax on Property in Canada 2025

Inheritance Tax in Canada: Estate Taxes, Probate, and Capital Gains

How the CRA Views Cryptocurrency Transactions

Barter Transactions

Since cryptocurrency is not considered legal tender by the Canadian government, any transaction made with crypto is classified as a barter transaction. This means that when you buy goods or services using cryptocurrency, you must calculate the fair market value (FMV) of the crypto at the time of the transaction and report it accordingly.

Calculating Fair Market Value

The CRA requires taxpayers to determine the FMV of cryptocurrency when reporting taxable events. Methods include:

• Using cryptocurrency exchange rates
• Relying on historical price data
• Maintaining consistent valuation methods across all transactions

Capital Gains vs. Business Income: How to Determine Your Tax Obligation

Determining whether your crypto earnings are capital gains or business income is crucial. Here’s how the CRA differentiates the two:

Indications of Business Income

Your crypto activities may be classified as business income if:

• You promote products or services using crypto
• You develop a business plan around crypto trading or mining
• You acquire inventory and capital assets for crypto-related activities
• You demonstrate an intention to make a profit
• Your trading activities are frequent and consistent

Examples of Crypto Businesses

• Cryptocurrency Mining – Using computer hardware to validate blockchain transactions and earn rewards
• Cryptocurrency Trading – Exchanging one cryptocurrency for another as an investment
• Cryptocurrency Exchanges – Operating an online platform for buying and selling crypto assets

Tax Treatment of Different Crypto Transactions

Cryptocurrency Mining

Mining crypto can be classified as either a hobby or a business. The tax treatment depends on factors such as mining frequency and income levels. If mining is considered a business, the income is fully taxable. Miners must maintain records of:

• Hardware and software expenses
• Utility costs
• Pool mining records
• Transaction fees earned

Cryptocurrency Trading

Exchanging one type of crypto for another is considered a taxable event. For tax purposes, you must determine the FMV of both assets in Canadian dollars and report the transaction as either a capital gain or loss.

Cryptocurrency Exchanges

Using platforms like Binance and Coinbase does not exempt you from taxes. These platforms track transactions, which must be reported to the CRA. Some exchanges even report transactions exceeding certain thresholds ($1,000 for Coinbase, $10,000 for Binance) to financial regulators.

Capital Gains Tax on Crypto

Crypto capital gains taxation follows these rules:

• 50% of gains are taxable
• Capital gains rates apply based on income brackets
• Net capital losses can offset capital gains
• Losses can be carried forward to future tax years

Tax Reporting Requirements for Crypto Investors

To stay compliant with the CRA, you must maintain accurate records of your transactions. Required documentation includes:

• Transaction dates
• Receipts for purchases and transfers
• Fair market value calculations
• Wallet and exchange records
• Accounting and legal costs related to crypto investments

Cryptocurrency and Canadian Tax Platforms

Binance Tax Reporting

Binance allows users to download their transaction history, but it does not provide tax forms. It reports transactions over $10,000 to financial authorities.

Coinbase Tax Reporting

Coinbase offers downloadable transaction reports but does not report directly to the CRA. However, it plans to begin reporting transactions exceeding $1,000.

Wealthsimple Tax Reporting

Unlike Binance and Coinbase, Wealthsimple automatically reports all crypto transactions to the CRA, simplifying the filing process.

Can You Avoid Paying Taxes on Crypto?

There is no legal way to cash out cryptocurrency without paying taxes. The CRA works with financial institutions and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to track crypto activity and prevent tax evasion. Transactions above $10,000 are automatically reported.

Common Misconceptions About Avoiding Crypto Taxes

• Using TFSAs and RRSPs – Crypto cannot be directly held in tax-advantaged accounts.
• Investing in Crypto ETFs – These investments are still subject to capital gains tax upon withdrawal.

How to Report Crypto Income on Your Taxes

Business Income

Crypto business income is reported using Form T-2125 (Statement of Business and Professional Activities). Business owners can deduct related expenses such as office costs, software subscriptions, and transaction fees.

Capital Gains Reporting

Crypto capital gains are reported under Section 3 of your tax return. If you incur capital losses, you can offset them against gains or carry them forward.

Methods for Valuing Crypto Transactions

Depending on whether crypto is classified as capital property or inventory, valuation methods differ:

• Capital property – Use the original purchase price and FMV at the time of sale.
• Inventory – Choose between:
  • The lower of cost or FMV at year-end
  • Full FMV valuation at year-end

Simplifying Crypto Taxes with Koinly Canada

Koinly is a crypto tax software that integrates with over 750 crypto platforms, calculates gains and losses, pre-fills tax forms, and integrates with TurboTax. It helps investors stay compliant with CRA regulations.

Different Methods for Reporting Crypto Income

Canada allows two reporting methods for crypto income:

1. Average Cost Basis Method – Determines the cost per unit by averaging total purchase costs over time.
2. Adjusted Cost Basis Method – Includes all acquisition costs and transaction fees to determine taxable amounts.

Final Thoughts

Understanding cryptocurrency taxation in Canada is essential for all investors and traders. The CRA actively monitors crypto transactions, and failure to report accurately can result in penalties, audits, and legal consequences. Whether you are mining, trading, or holding crypto, staying informed and using tax tools like Koinly can simplify compliance and help you manage your tax obligations efficiently.