Crypto Tax in Canada: Complete 2026 Guide

How is Crypto Taxed in Canada?

The Canada Revenue Agency (CRA) treats cryptocurrency as a commodity, not currency. Crypto activity is taxed under the Income Tax Act either as capital gains (the typical treatment for personal investors) or as business income (where activity rises to a trade or business). The distinction matters significantly: capital gains receive the inclusion-rate treatment (only 50% or 66.67% of the gain is included in taxable income); business income is 100% taxable but allows full expense deduction.

The 2024 federal budget introduced a major shift effective 25 June 2024: the capital gains inclusion rate increased from 50% to 66.67% for individuals on gains above $250,000 per year. Gains up to $250,000 remain at 50% inclusion. The threshold is per year, not cumulative — high-volume crypto traders may exceed it more easily than they realise. Combined with provincial taxes, the effective marginal rate on large capital gains now ranges from approximately 33% to 35.7%.

The CRA has been increasingly active. Since 2021 the agency has used "unnamed person requirements" to obtain customer data from Canadian crypto exchanges, and has issued nudge letters to suspected non-disclosers. The CRA published its Cryptocurrency guidance originally in 2014 with major updates in 2021 and 2023.

Capital Gains vs Business Income

The CRA applies "badges of trade" to determine whether crypto activity is investment (capital gains) or business (income). Factors considered include:

• Frequency and number of transactions
• Period of ownership (short vs long)
• Intention at acquisition (resale for profit vs long-term hold)
• Knowledge of the crypto markets / time devoted
• Financing structure (using leverage suggests business)
• Connection to the taxpayer\'s other activities

A casual investor making a few trades a year clearly sits in the capital gains category. A day-trader running automated strategies clearly sits in business. Most retail investors fall on the capital gains side. Mining at commercial scale is generally business income; small-scale hobby mining can be either depending on facts.

Capital Gains Inclusion Rate

For capital gains realised by individuals:

• First $250,000 of annual gains: 50% inclusion. Half the gain is added to your taxable income and taxed at your marginal rate.
• Annual gains above $250,000: 66.67% inclusion. Two-thirds of the gain is included in taxable income.

The $250,000 threshold applies to net capital gains for the year (gains minus losses) and is per individual, not per asset class. Crypto gains aggregate with stock gains, real estate gains, and other capital gains.

Federal marginal tax rates for 2025 range from 15% (up to $55,867) to 33% (above $246,752). Provincial rates stack on top — Ontario\'s top combined marginal rate is 53.53%; Alberta\'s 48%; Quebec\'s 53.31%; BC\'s 53.50%; the four lowest-tax provinces (Yukon, NWT, Nunavut, Alberta) range from 47.5% to 48%.

Effective top marginal rates on crypto capital gains: at 50% inclusion approximately 24.86% to 26.76% across provinces; at 66.67% inclusion approximately 33.15% to 35.69%.

Which Canadian Crypto Transactions are Taxable?

• ✅ Selling crypto for CAD or any fiat — taxable disposition
• ✅ Swapping crypto for another crypto — disposition of the asset given up
• ✅ Using crypto to buy goods or services — disposition at fair market value
• ✅ Gifting crypto — disposition at fair market value
• ✅ Mining at commercial scale — business income at receipt
• ✅ Staking rewards — generally taxable as income at receipt
• ✅ Receiving crypto as employment income — wage income at fair market value
• ✅ Most airdrops — income at receipt
• ❌ Buying crypto with CAD — not taxable; establishes ACB
• ❌ Holding — no disposition
• ❌ Transferring between own wallets — no disposition
• ❌ Some peer-to-peer gifts (spousal) — rollover at ACB

How to Report Crypto to the CRA

1. Track every disposition. The CRA requires you to keep records of acquisition date, cost (ACB), fair market value at disposition, exchange used, and counterparties. Records must be retained for six years after filing.
2. Calculate Adjusted Cost Base (ACB). Same-asset holdings use the weighted-average ACB method. When you sell, your gain is proceeds minus the proportional ACB plus any allowable expenses.
3. Report capital gains on Schedule 3. Use the "Other shares and identical properties" or "Other property" lines, summarising your crypto dispositions by asset.
4. Report business income on Form T2125 (or T2 if a corporation). Used for active traders, miners, and other commercial crypto activity.
5. File Form T1135 if foreign holdings exceed $100,000 CAD at any time during the year. Includes crypto held on non-Canadian exchanges. Penalties for non-filing start at $25/day.
6. File and pay by April 30, 2026. Self-employed individuals (business income) have until June 15 to file but tax is still due April 30.

Crypto Tax for Specific Activities in Canada

Mining

Commercial mining is treated as a business — rewards are business income at fair market value when received. Equipment, electricity, and facility costs are deductible. Hobby-scale mining can be capital activity, with the reward considered to have a $0 ACB until disposed.

Staking

CRA\'s consistent position is that staking rewards constitute taxable income at fair market value when received. The activity\'s classification as business or other income depends on commercial scale. The income amount becomes ACB for future disposal calculations.

NFTs

NFTs follow the same capital-vs-business framework as fungible crypto. The CRA has noted that certain NFT activity (active flipping, collection-based trading) may rise to business income.

DeFi

The CRA has not issued comprehensive DeFi guidance. Conservative treatment treats each protocol interaction (deposit, withdrawal, swap) as a potential disposition, with yield accruals as income. Document everything carefully — DeFi positions can multiply tax-event count rapidly.

Crypto Salary

Crypto wages are taxable employment income at fair market value at payment. Employer must report on T4; standard CPP/EI/income tax withholding applies, payable in CAD by the employer regardless of payment medium.

Mining Loss

If mining is a business, losses are fully deductible against other business or employment income. If mining is capital (hobby), losses are capital losses with the standard 50% allowable / non-capital-loss treatment.

Adjusted Cost Base Method

Canada uses a single ACB method — weighted-average cost basis for same-asset holdings. Unlike the US, you cannot choose FIFO, LIFO, or HIFO. Each time you acquire more of the same crypto, your average cost updates proportionally. The "superficial loss" rule (Section 54) disallows a loss if you (or affiliated person) acquire the same asset within 30 days before or after the disposition.

Where you hold the same crypto on multiple platforms, you compute a single ACB across all your wallets and exchanges. Inter-platform transfers do not affect ACB. Wallets are not separately pooled — a single ACB for "BTC" combines every wallet and exchange.

Canada Crypto Tax Software

Official Sources & References