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Learn about the Taxpayer responsibilities of Canadian crypto investors. When taxable events occur, calculating and reporting profit & loss and capital gains vs. business income.
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Bitcoin and cryptocurrency tax info for Canadian investors, updated: March 30, 2021.
Cryptocurrency is a term that refers to all digital currency, but within this term there are many different types of coins and tokens, such as: Bitcoin, Litecoin, Ripple, Pokadot, Ethereum, etc. Each of these is accounted for and valued as a separate asset.
In Canada, cryptocurrency is not considered a “currency”, like the Canadian Dollar or US Dollar. It is treated like a commodity for Income tax purposes similar to Gold.
Learn about crypto taxes through what the CRA considers to be taxable events when buying, selling, and holding cryptocurrency in Canada.
Federal Court of Canada issued an order requiring Coinsquare Ltd. to divulge information about its customers to the Canadian Revenue Agency (CRA)
Buying cryptocurrency is not a taxable event, but the purchase of cryptocurrency does affect the adjusted cost base of your cryptocurrency.
Selling and trading a coin for a different one is a taxable event reportable to the Canada Revenue Agency.
Gain or loss is the difference between the proceeds received from the sale of the coin or token less the average adjusted cost base.
Calculations
Allowable capital losses from cryptocurrency can be used to offset taxable capital gains from other types of investments and vice versa.
Reportable Activity
If you acquire or dispose of cryptocurrency, you are responsible for keeping all required records of your cryptocurrency transactions.
Tax Record Keeping
50 per cent of gains are included into income with capital gains vs. business income where 100 per cent of the gain is included.
Yes, you have to report any sales of Bitcoin and all cryptocurrency to CRA as a Canadian tax payer.
The Canadian tax system is a self-assessing system, so the onus is on the individual taxpayer to properly report all cryptocurrency sales. Taxing authorities can use the court system to try and gain access to cryptocurrency transactions completed on third party exchanges. The IRS has successfully won in court the right to obtain specified information related to Coinbase users. CRA has also recently won in court the right to obtain specified information related to Coinsquare users. The decision by the Federal Court of Canada was released on March 19, 2021.
CRA has a cryptocurrency task force in charge of developing audit procedures to ascertain the risk of unreported cryptocurrency transactions. CRA also has various methods of reassessing an individual’s tax return with limited information. The responsibility to provide sufficient supporting documentation rests with the taxpayer. Without sufficient documentation, CRA can still use various audit techniques or reassessment tools to reassess the taxpayer. Since the burden of supporting documentation rests with the taxpayer, the taxpayer would need to file a formal objection to the reassessment and prove why the reassessment is not accurate. This can be a costly and time-consuming process.
CRA has a voluntary disclosure program available to report unreported or incorrectly reported transactions. For additional information on CRA’s voluntary disclosure program visit CRA’s website. You should seek professional advice before submitting an application under CRA’s voluntary disclosure program.
Your Canadian Bitcoin and cryptocurrency tax information hosts, John and Myles, bring a combined 35 years of experience and a strong passion for keeping Canadian investors in the know when it comes to tax info.
Together, we created a platform to not only to provide the best information we can to our members, but to the entire crypto community in Canada, and offer an opportunity to engage with your questions in an AMA on April 22nd @ 6PM ET.
Join us at:
National Director of Tax Services, Baker Tilly Canada
Specialties: Personal and Corporate Tax Advisory, Cryptocurrencies, Estate Planning, CRA dispute resolutions, and Tax Risk Management
Business Tax Planning | Corporate & Commercial, Arcus Legal
A member of the Canadian crypto community since 2017 and formerly a miner of Litecoin and Ethereum
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Coinberry believes that the information provided in this section is reliable and is provided to the best of our ability based on the information available to us, however this information may not reflect all required adjustments. The information provided in this section should not be used for the purpose of tax reporting as certain events are dependent on individual circumstances. Please read our full disclaimer.
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