Canada Crypto Tax Guide 2025: Latest CRA Updates

There are some crypto activities that are tax-exempt. These activities include:

💳  Buying crypto (including NFTs) with Canadian dollars.

🔁  Transferring crypto between your own wallets.

🔒  Holding crypto.

🎁  Being gifted crypto.

Crypto is subject to Income Tax in Canada - but it all comes down to the specific transaction as well as how your investment activities are viewed from a tax perspective as to whether you have business income (or losses) or a capital gain (or loss).

If your crypto is taxed as income, you’ll pay Income Tax on your entire profit. If your crypto is taxed as a capital gain, you’ll pay Income Tax on half of any profit. 

The CRA decides whether an investor has business income or a capital gain on a case-by-case basis. An individual transaction may be business income, while other transactions made by the same investor may result in capital gains. The CRA states the following are common signs an investor may have business income as opposed to capital gains:

🤑 Activities are conducted for commercial reasons.
🪝 The investor promotes a product or service.
💎 The investor intends to make a profit.
⏱️ Crypto activities are regular or repetitive

All this said, for the remainder of this guide, we’ll focus on how transactions will be taxed for the majority of investors with capital gains and transactions that will be taxed as income regardless of your individual trading activities.

For the majority of investors, you’ll have a capital gain or loss when you ‘dispose’ of a commodity like crypto. 

The CRA however doesn’t have a specific capital gains tax rate. Instead, you’ll pay Income Tax on half of any gain. Similarly, you can offset half of any capital loss against gains to reduce your overall tax liability. 

A caveat to this though, this is changing under the latest guidance for individuals with gains in excess of $250,000 a year. The inclusion rate for these individuals increases from half to two-thirds on capital gains in excess of $250,000.

You can see the latest CRA tax brackets here.

The following activities constitute a disposal (with a resulting gain or loss) according to CRA guidance:

🏡  Selling crypto for Canadian dollars or another fiat currency.

🤝🏽  Trading one crypto for another, including NFTs, stablecoins, and other tokens.

🧸  Spending crypto to pay for goods or services.

🎁  Gifting crypto.

There are some transactions that are viewed as income by the CRA. This is generally when your transactions involve earning new crypto in some way. This includes:

💰  Getting paid in crypto
⛏️  Mining rewards
🏦  Staking rewards
💸  Referral bonuses
🎨  Selling an NFT you've created

As a reminder, if you’re selling or trading crypto at scale - like a business - then your profits from this may be business income, not capital gains, and taxed as such.

As well as this, while there’s no specific guidance from the CRA on DeFi transactions yet - this doesn’t mean they’re not taxable. Depending on the nature of the transaction and the specific protocol, DeFi transactions may be taxed as business income or capital gains. You should speak to an experienced crypto accountant for advice on the tax implications your DeFi investments.

First, you need your cost basis for your crypto. This is how much your crypto cost you, plus any allowable fees. For example, if you purchased 1 ETH for $2,000 with a purchase fee of $100 - your cost basis for that ETH would be $2,100.

For crypto taxed as income, this is generally the fair market value of your crypto in CAD on the day you received it.

The above example is simplistic and the majority of investors are transacting with multiple assets of the same kind across multiple platforms.

Identifying your cost basis for individual assets here becomes arduous, which is why the CRA has a specific method to make it simpler to identify the cost basis of assets you’ve disposed of and it’s called the average cost basis method. This method states you use the average cost of each identical property to determine your adjusted cost base.

For example, let’s say you own 3 BTC, all bought at different price points of $20,000, $30,000 and $50,000 respectively. To calculate your average cost basis, add the total cost of your BTC ($100,000) and divide it by the amount of BTC held (3) to give you an average cost base of $33,333.33.

A caveat to this though is you also need to factor in the superficial loss rule. This rule exists to stop traders from creating artificial losses by disposing of assets for a loss and then re-acquiring them back within a short time period. The rule kicks in when:

• The taxpayer (or someone acting on their behalf) acquires cryptocurrency that is identical to the one that they dispose of, either 30 days before or after the disposal, and
• At the end of that period, the taxpayer or a person affiliated with the taxpayer owns or has a right to acquire the identical property.

If the superficial loss rule kicks in, any losses will be disallowed.

If all this sounds like a daunting amount of calculations, there are crypto tax calculators like Koinly that make this process much easier and can calculate your cost basis and subsequent gains or losses according to the CRA guidance. 

Once you have your cost basis, subtract this from your sale price to calculate your gain or loss.

If you otherwise disposed of your crypto (by trading, spending, or gifting it) use the fair market value of your crypto in CAD on the day you disposed of it as your sale price. 

If you have capital gains, you’ll pay Income Tax on half this gain. If you have a capital loss, you can offset half of your capital loss against any taxable gains in order to reduce your tax liability.

If you don’t have any gains to offset losses against, you can carry these losses forward to offset against gains in the future.

There is no official guidance from the CRA on whether lost or stolen crypto can be claimed as a capital loss. However, the CRA does allow taxpayers to deduct capital losses due to theft of capital property for other assets. As such, the CRA may allow this for crypto as another kind of capital asset, but you should speak to an accountant for advice on your specific situation.

Once you’ve calculated your gains, losses, and income - you’ll need to submit this information to the CRA as part of your annual tax return using the following forms:

• Report crypto capital gains and losses on Schedule 3 Form
• Report crypto income on Income Tax Return T1

You can do this online through the CRA’s MyAccount service, or you can use tax software like TurboTax or H&R Block.

Crypto tax is complicated - but there’s plenty of options available to help make it easier, including crypto tax calculators like Koinly. 

With Koinly, you can either connect to Kraken via SSO (OAuth) to automatically import your data or you can export your account history from Kraken as a CSV file and upload this to Koinly instead. 

Once Koinly has your transaction data from Kraken, it’ll identify your cost basis using the average cost basis accounting method, with the superficial loss rule considered. You can then generate your crypto tax reports to file easily, including the Schedule 3 Report, Complete Tax Report, and TurboTax Report.

You can’t outright avoid tax on your crypto without facing some steep penalties (and more!) from the CRA. But there are some steps savvy investors take to reduce their taxable gains and pay less tax including:

🔍  Tracking their unrealized losses to identify opportunities to harvest these losses.

🌽  Harvesting these losses in order to offset them against taxable gains and reduce their overall tax bill.

🧓  Investing in a Registered Retirement Savings Plan (RRSP).

💎  Hodling for the moon.

Now that you understand how your digital asset investments are taxed, why not continue your crypto journey by checking out our Learn Center.