Crypto Taxes: Buying and Holding Bitcoin and Cryptocurrency

Buy Bitcoin > Crypto Taxes > Buying and Holding

Updated: March 30, 2021

Owning and holding cryptocurrency is not a taxable event. Watching the rise and fall in the price of a particular coin or token, or the market as a whole, has no tax effect until a taxable event occurs with that particular coin or token.

Moving a particular cryptocurrency between exchanges or between your wallets is not a taxable event. However, there is usually a fee associated with transfers. Fees should be tracked because it will be a deduction to the overall gain or loss when you do sell a particular coin or token.

Some examples of transfers without a taxable event are:

Transferring 10 Bitcoin from Coinsquare to Coinberry. This is not a sale of a coin or token. There has been no actual disposition of the coin or token, simply a change in custodian.
Customers Transferring 10 Bitcoin to or from Coinberry with your personal wallet. This is not a sale of a coin or token. There has been no actual disposition of the coin or token, simply a change in custodian.

There are no special reporting requirements to the CRA that you are holding cryptocurrency.

Crypto Taxes: Buying & holding

Buying cryptocurrency is not a taxable event

Crypto Taxes: Selling & trading

The sales of crypto must be reported to CRA

Calculation of crypto gain or loss

Proceeds minus the average adjusted cost base

Reportable gain or loss

All crypto gains and losses are reportable

Crypto record keeping for tax purposes

Keep records of your cryptocurrency transactions

Capital gain vs. Business income

Capital gains and losses vs. Business income

The purchase of cryptocurrency does affect the adjusted cost base of your cryptocurrency. Each coin or token must be accounted for separately when calculating the proceeds, adjusted cost base, and gain or loss.

Calculating Adjusted Cost Base of Bitcoin and cryptocurrency

ACB Calculation

Purchase Date

Aug 5, 2016

Jul 1, 2017

Dec 15, 2017

July 12, 2019

Dec 18, 2020

Mar 12, 2021

Number of Coins

(A)

Openning

1.00

2.00

3.00

4.00

5.00

(B)

Purchased

1.00

(C)=(A)+(B)

Closing

1.00

2.00

3.00

4.00

5.00

6.00

Cost of Coins

(D)

Openning

$800

$4,300

$29,300

$44,300

$74,800

(E)

Purchased

$800

$3,500

$25,000

$15,000

$30,500

$76,000

(F)=(D)+(E)

Closing

$800

$4,300

$29,300

$44,300

$74,800

$150,800

ACB

(G)=(F)/(C)

Average

$800

$2,150

$9,767

$11,075

$14,960

$25,133

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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.