In Canada, crypto is taxed under the same income tax rules as everything else, and you report it on your regular return. If you sold, traded or spent crypto as an investor, half of the gain is added to your income. If your activity looks like a business, the whole profit is income instead.
That’s the short version. The longer one is mostly about record keeping and arithmetic, and both are easier than they first look once you know which transactions count. This article walks through what the Canada Revenue Agency (CRA) says, using its own published guidance, and adds worked examples with real numbers. It is general information for Ontario residents, not advice on your particular file.
How the CRA treats crypto
The CRA describes crypto-assets as digital representations of value that rely on cryptographically secured distributed ledgers to validate transactions. Its guidance names several kinds: payment tokens such as Bitcoin, utility tokens, security tokens, NFTs and stablecoins. For tax purposes what matters is less the label and more what you did with the asset.
There are two possible outcomes. Depending on your activity, the CRA says you may realize business income (or loss), or a capital gain (or loss). Which one applies is decided case by case, and the rest of the tax treatment follows from that first decision.
Living in Toronto changes nothing about the federal rules. It does change the rate you pay, because Ontario tax is layered on top of federal tax on the same income. For 2026 the federal brackets run from 14% up to 33%, and Ontario runs from 5.05% up to 13.16%, with the surtax and health premium applied on top. A crypto gain lands at the top of your income, so it is taxed at your highest bracket, not at an average rate. The marginal tax rate calculator shows where that bracket sits for your income.
What counts as a sale
Tax law calls a sale a disposition, and the word is wider than you might expect. Under the CRA’s guidance, these events are dispositions:
- Selling crypto for Canadian dollars or another government currency.
- Trading one crypto-asset for a different one.
- Using crypto to pay for goods or services.
- Giving crypto away as a gift or donation.
The swap is the one that surprises people. Trading Bitcoin for another coin never touches your bank account, yet it counts as a sale of the Bitcoin at its fair market value on that day, and it also sets the cost of the new coin you received.
Paying for a laptop with crypto works the same way. The CRA treats it as barter: you’re considered to have disposed of the crypto when you use it to pay a vendor. If the coins were worth more than what you originally paid for them, you have a gain, even though no cash changed hands.
Two things are not dispositions. Buying crypto with Canadian dollars is only an acquisition, and it creates cost, not a gain. Moving crypto between wallets that you own is also not a sale, according to the CRA. That includes sending coins from an exchange to your own hardware wallet. Keep a note of the transfer, though, because without it your records can look like coins vanished.
Capital gain or business income
Most people who buy crypto and sell it later fall on the capital side. The CRA says your activity is a business when it is consistent with what a person carrying on a business would do. Its indicators include a high frequency of transactions with short holding periods, real market knowledge and a lot of time spent analyzing markets, financing through debt, and advertising of trading services.
No single indicator settles it. The CRA states that the question of carrying on a business must be settled on a case-by-case basis. If you’re unsure, the safest step is to describe your pattern to a tax professional or to ask the CRA directly, before you file.
The gap between the two treatments is large. With capital treatment you include half of the gain. With business treatment the profit is fully taxable, and you report it as business income, often on Form T2125 (Statement of Business or Professional Activities). Losses behave differently as well, and business losses can be deducted more broadly than capital losses.
If you do run a business around crypto, other rules can apply too, including GST/HST. The CRA has a separate page on collecting and remitting GST/HST on crypto transactions. The small supplier threshold is $30,000 in four consecutive calendar quarters, and the GST/HST calculator can help with the 13% Ontario rate. Someone who owns a few coins as an investment is a very different case from someone operating a trading business, so it pays to be honest about which one applies.
How capital gains are worked out
The formula is short. Your capital gain equals your proceeds of disposition minus your adjusted cost base (ACB) minus any outlays and expenses connected with the sale. The CRA puts it this way: you have a gain when proceeds exceed the ACB plus the expenses of selling.
Proceeds are the fair market value in Canadian dollars at the moment of the sale. For a trade of one coin for another, use the value of what you gave up. For a purchase paid in crypto, use the price of the goods in Canadian dollars if it reflects the fair value.
Then comes the inclusion rate. The CRA says that if you disposed of a crypto-asset on account of capital, you must include half of your capital gains, known as taxable capital gains, in your income for the year. The 50% inclusion rate applies to every dollar of gain, whatever its size. For a single sale, the capital gains tax calculator runs the numbers.
Losses come with a limit. You can deduct half of your capital losses, called allowable capital losses, but only against taxable capital gains. A crypto loss cannot lower your employment income or your rental income. If your losses exceed your gains in a year, ask the CRA or a professional how the unused portion carries over before you count on it.
A small example shows the ordering. Suppose you sold Bitcoin for a gain of $736 and, in the same year, sold an altcoin at a loss of $500. Your net capital gain is $236, and the taxable part is $118. Had the loss been $1,000, the net figure would be a loss of $264, and the allowable capital loss of $132 could not be used against your salary. It would sit unused until the CRA’s carry-over rules let you apply it against a gain in another year.
Adjusted cost base with a worked example
ACB is usually the cost of a property plus the expenses of acquiring it, such as commissions. The CRA’s capital gains guide adds a rule that matters a great deal for crypto. If you buy and sell identical property over time, you calculate the average cost of each unit in the group at the time of each purchase.
So you don’t pick which coins you sold. Each coin of the same type carries the same average cost, and you recalculate that average with every new purchase. Here is an example with made-up round numbers.
Say you buy 0.10 Bitcoin for $4,000 plus a $40 fee. Later you buy another 0.05 for $3,000 plus a $30 fee. Your total cost is $7,070 for 0.15 units, so the average cost is about $47,133 per whole coin.
Now you sell 0.06 for $3,600 and pay a $36 fee. Your net proceeds are $3,564. The ACB of the 0.06 you sold is 0.06 times $47,133.33, which is $2,828. The gain is $3,564 minus $2,828, or $736, and the taxable part is half of that, $368.
What’s left matters just as much. You still hold 0.09 coins with a remaining ACB of $7,070 minus $2,828, which is $4,242. The average per coin has not changed, and it carries into the next sale.
Each type of crypto is tracked separately. Ether has its own pool and its own average, and so does every other coin. Mixing them up is the most common source of wrong numbers, so keep one pool per asset.
Fees are part of the calculation. The fee on a purchase adds to your cost. The fee on a sale reduces your proceeds, as in the example above. Skipping fees does not make your return safer, only less accurate, and it usually means you pay slightly more than you owe.
The superficial loss rule
Selling at a loss to lock in a deduction, then buying the same asset straight back, is what the superficial loss rule is designed to stop. A loss is generally denied when you or an affiliated person, such as a spouse, buys identical property in the 30 days before or the 30 days after the sale, and still holds it at the end of that window.
The loss isn’t gone forever. It is added to the ACB of the property you bought back, so it shows up later as a smaller gain or a larger loss. Here is how it plays out.
You hold one Ether with an ACB of $3,000. You sell it for $2,200, a loss of $800. Ten days later you buy one Ether again for $2,300, and you still hold it more than 30 days after the sale. The $800 loss is denied for now, and your new ACB becomes $2,300 plus $800, which is $3,100.
Two practical points come out of this. First, if you actually want the loss, wait until the 31st day before you rebuy, or buy a different asset. Second, remember that a purchase in a different account counts. An automatic recurring buy on an exchange can trigger the rule without you noticing, because the buy happens on schedule while you’re thinking about the sale.
Putting it on your return
Capital gains and losses go on Schedule 3 of your T1 return. You don’t attach your transaction records, and the CRA says you don’t need to, but you must keep them in case it asks. Business income goes on the business forms instead.
The filing deadline is April 30. Self-employed people have until June 15 to file, but any balance owing is still due April 30. The income tax calculator lets you add your taxable capital gains to your other income and see the estimated total before you file.
A short illustration of what that means in dollars. If your taxable capital gain is $368 and, for the sake of the exercise, your combined marginal rate is 30%, the tax is about $110. Real bills depend on your bracket, your credits and the surtax, so treat that as a sketch of the method and not a forecast.
Remember to answer the crypto question on the return if your tax software asks one. Leaving a transaction off because it seemed small is a common route to a reassessment later. See also the RRSP calculator, and the full set of tax calculators.
Sources
- CRA, Guide for cryptocurrency users and tax professionals
- CRA, Reporting income from crypto-asset transactions
- CRA, Keeping books and records of crypto-assets
- CRA, Determining the value of crypto-assets
- CRA, T4037 Capital gains guide
Common questions
Is swapping one crypto for another taxable in Canada?
Last reviewed: . Figures come from the official sources listed above. How we check the numbers and our editorial policy.