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Guide to Bitcoin & Crypto Taxes in Canada

Written by:

Eivind Semb

Last updated:

Have you invested in cryptocurrency and now wonder how crypto is actually taxed in Canada? The Canada Revenue Agency (CRA) has published a guide for the taxation of cryptocurrency which goes into detail about the different tax rules in Canada. The most important takeaway is that gains from cryptocurrencies should be reported as either business income or capital gains. If this made you more confused – don’t worry! In this complete tax guide, we will explain everything you need to know about how crypto taxes work in Canada including breaking down the latest tax guide from the CRA, how much tax you must pay on cryptocurrencies in Canada, the difference between business income and capital gains on crypto, and how you can use a cryptocurrency tax software like Coinpanda to save both time and money with reporting your taxes.

Just a heads up! This guide is quite extensive due to the complex nature of cryptocurrency taxes. While we recommend reading this guide from A to Z the first time to make sure you don’t miss out on anything that is important to your situation specifically, you can also use the menu navigation on the right side to jump to any specific crypto tax question later.

We are also updating this guide regularly based on the latest tax guidelines and rules from the CRA. All updates will be listed below so that you can quickly see if anything has been updated since your last visit:

Latest updates

  • February 22, 2022: Added tax rates for federal and provincial income
  • February 21, 2022: Updated for 2021/2022
  • October 9, 2020: Updated for 2020/2021
  • May 28, 2019: The first version published

Let’s start with the most important question of all…

Do you pay taxes on crypto in Canada?

Yes, you need to pay taxes on both your income and capital gains from cryptocurrency in Canada. Any cryptocurrency sold during the tax year that you made profits on must be reported to the CRA in your annual tax return similar to profits from other assets like equities or commodities. You must also report any income if you have received cryptocurrency considered business income from mining, staking, or interest.

In the next section, we will look closer at how crypto is actually taxed in Canada and how the CRA considers income from cryptocurrency to be classified as either business income or capital gains.

How is crypto taxed in Canada?

The Canadian Senate reviewed the issue of taxation of cryptocurrency already in 2014 to address the growing popularity of crypto assets. Because of this, the Canada Revenue Agency (CRA) took on the task of understanding how to tax crypto assets and later published guidance to better guide Canadians through the complex tax landscape surrounding cryptocurrencies. By following the tax rules outlined in this guide, crypto investors in Canada are now finally able to report their taxes according to the law.

The CRA considers bitcoin and other cryptocurrencies to be a commodity with regards to taxation. In general, each disposal of cryptocurrency is a taxable event according to the CRA:

  • Selling of cryptocurrency and you receive fiat currency (such as Canadian dollars)
  • If you trade, exchange, or swap cryptocurrency (includes also crypto-to-crypto transactions)
  • Gifting cryptocurrency to another person
  • Use cryptocurrency to pay for goods or services

It should be no doubt now that if you have dabbled in cryptocurrencies the last year you probably have to report this in your tax return to the CRA in 2022.

Do you pay capital gains on cryptocurrency in Canada?

The answer is that it depends.

Earnings from cryptocurrency transactions are treated as either business income or as capital gains. Similar to earnings are losses considered either business losses or capital losses. Business income is treated differently than capital gains for tax purposes.

The CRA lists some common signs that your activity may be classified as a business:

  • You carry on the activity for commercial reasons
  • You undertake activities like a business. This might include preparing a business plan and acquiring capital assets or inventory.
  • You promote a product or service
  • You have intentions to make a profit (even if you are unlikely to do so in the short term)

In most cases, a business activity needs to involve repetitive actions over time. If you are a day trader you will therefore most likely be considered to carry on a business by the CRA. On the other hand, casual investors that are not active in the market on a regular basis will probably not be considered as conducting business activity.

Gains from disposing of cryptocurrency should be reported in the following year’s tax return. This means that cryptocurrency sold in 2021 should be reported in the tax return you file in 2022. In Canada, only half of the capital gain is actually subject to tax and is also referred to as the taxable capital gain. It’s also important to be aware that you are not allowed to use any capital losses to offset other income such as employment income. Capital losses can only be used to offset other capital gains. If you had a net capital loss during the year, you are allowed to carry forward this loss to a future year, limited up to three years.

How much tax do you pay on cryptocurrencies?

Taxes on cryptocurrencies are considered as either capital gains tax or as income tax in Canada. While many countries including the US have special tax rates for capital gains, this is not the case in Canada. Instead, any earnings considered to be capital gains are taxed at the same rate as your federal income tax and provincial income tax rate. The good news, however, is that you pay only tax on half of your total capital gains!

Let’s break down the different tax rates to better understand how much tax you must actually pay.

Federal income tax

Tax RateIncome – 2021Income – 2022
15%$0 – $49,020$0 – $50,197
20.5%$49,021 – $98,040$50,198 – $100,392
26%$98,041 – $151,978$100,393 – $155,625
29%$151,979 – $216,511$155,626 – $221,708
33%$216,512+$221,708+
This table shows the federal income tax rates in Canada for 2021 and 2022. Source: The CRA

Provincial income tax

The CRA has also published information about the updated provincial income tax rates for 2022 on their website. We will summarize below the different tax rates for each province:

Newfoundland and Labrador provincial tax rate

Tax RateIncome – 2022
8.7%$0 – $39,147
14.5%$39,148 – $78,294
15.8%$78,295 – $139,780
17.8%$139,781 – $195,693
19.8%$195,694 – $250,000
20.8%$250,001 – $500,000
21.3%$500,001 – $1,000,000
21.8%$1,000,001+
This table shows the provincial income tax rates in Newfoundland and Labrador for 2022

Prince Edward Island provincial tax rate

Tax RateIncome – 2022
9.8%$0 – $31,984
13.8%$31,985 – $63,969
16.7%$63,970+
This table shows the provincial income tax rates in Prince Edward Island for 2022

Nova Scotia provincial tax rate

Tax RateIncome – 2022
8.79%$0 – $29,590
14.95%$29,591 – $29,590
16.67%$29,591 – $93,000
17.5%$93,001 – $150,000
21%$150,001+
This table shows the provincial income tax rates in Nova Scotia for 2022

New Brunswick provincial tax rate

Tax RateIncome – 2022
9.4%$0 – $44,887
14.82%$44,888 – $89,775
16.52%$89,776 – $145,955
17.84%$145,956 – $166,280
20.3%$166,281+
This table shows the provincial income tax rates in New Brunswick for 2022

Quebec provincial tax rate

Tax RateIncome – 2021Income – 2022
15%$0 – $45,105$0 – $46,295
20%$45,106 – $90,200$46,296 – $92,580
24%$90,201 – $109,755$92,581 – $112,655
25.75%$109,756+$112,656+
This table shows the provincial income tax rates in Quebec for 2021 and 2022. Source: Revenue Quebec

Ontario provincial tax rate

Tax RateIncome – 2022
5.05%$0 – $46,226
9.15%$46,227 – $92,454
11.16%$92,455 – $150,000
12.16%$150,001 – $220,000
13.16%$220,001+
This table shows the provincial income tax rates in Ontario for 2022

Manitoba provincial tax rate

Tax RateIncome – 2022
10.8%$0 – $34,431
12.75%$34,432 – $74,416
17.4%$74,417+
This table shows the provincial income tax rates in Manitoba for 2022

Saskatchewan provincial tax rate

Tax RateIncome – 2022
10.5%$0 – $46,773
12.5%$46,774 – $133,638
14.5%$133,639+
This table shows the provincial income tax rates in Saskatchewan for 2022

Alberta provincial tax rate

Tax RateIncome – 2022
10%$0 –  $131,220
12% $131,221 – $157,464
13%$157,465 – $209,952
14%$209,953 – $314,928
15%$314,929+
This table shows the provincial income tax rates in Alberta for 2022

British Columbia provincial tax rate

Tax RateIncome – 2022
5.06%$0 –  $43,070
7.7%$43,071 – $86,141
10.5%$86,142 – $98,901
12.29%$98,902 – $120,094
14.7%$120,095 – $162,832
16.8%$162,833 – $227,091
20.5%$227,092+
This table shows the provincial income tax rates in British Columbia for 2022

Yukon provincial tax rate

Tax RateIncome – 2022
6.4%$0 –  $50,197
9%$50,198 – $100,392
10.9%$100,393 – $155,625
12.8%$155,626 – $500,000
15%$500,001+
This table shows the provincial income tax rates in Yukon for 2022

Northwest Territories provincial tax rate

Tax RateIncome – 2022
5.9%$0 –  $45,462
8.6%$45,463 – $90,927
12.2%$90,928 – $147,826
14.05%$147,827+
This table shows the provincial income tax rates in Northwest Territories for 2022

Nunavut provincial tax rate

Tax RateIncome – 2022
4%$0 –  $47,862
7%$47,863 – $95,724
9%$95,725 – $155,625
11.5%$155,626+
This table shows the provincial income tax rates in Nunavut for 2022

How to calculate capital gains in Canada

A capital gain occurs when you sell a cryptocurrency for more than the original purchase price. On the other hand, if the sales price is lower than the purchase price, it is considered a capital loss. Only half of the capital gain is subject to tax in Canada as already mentioned, and you can also use any capital losses to offset your capital gains.

The general formula for calculating capital gain is:

capital gain = selling price – purchase price

To calculate the capital gains you need to first establish the cost basis for the cryptocurrency you are disposing of. In Canada, you need to use Adjusted Cost Base (ACB) which is simply the average purchase cost of all coins you have in possession. The capital gain for each transaction is then determined as the ACB value subtracted from the selling price.

For more information about how Adjusted Cost Base including the Superficial Loss Rule works, see our detailed article about how to calculate cost basis in Canada:

Is buying cryptocurrency taxed in Canada?

The answer is that it depends. More specifically, whether or not buying cryptocurrency is taxed depends on what type of asset you are paying with to acquire the other cryptocurrency. Different tax rules apply if you are paying for a cryptocurrency with fiat currency such as CAD, or if you are paying using another cryptocurrency.

Buying cryptocurrency with fiat currency (CAD, USD, etc)

Buying cryptocurrency with fiat is not considered a taxable event in Canada. Note that it’s important to keep track of all your purchases and complete transaction history so that you can calculate your cost basis and deduct the costs when you later dispose of the assets.

blue tax icon

Tax status:

Not taxed

Buying crypto and paying with another crypto (Ex: ETH → DOGE)

Buying one cryptocurrency and paying with another cryptocurrency is considered a taxable transaction by the CRA. The CRA sees this as a barter transaction, and you have to determine the value in Canadian dollars at the time of the transaction. The key factor is that every time you dispose of one cryptocurrency, it will be considered a taxable event in Canada similar to most other countries. This includes also stablecoins which are treated similarly to other crypto assets including altcoins for tax purposes.

This means that if you are swapping ETH for DOGE on an exchange, you must calculate and report the capital gains from the ETH that was sold.

You need to first calculate the fair market value (FMV) of the cryptocurrency received from the transaction, and then work out the cost basis of the cryptocurrency sold according to the Adjusted Cost Base method. The capital gains can then be found directly as the cost basis subtracted from the value of the crypto received.

blue tax icon

Tax status:

Capital gains / business income

Example 1: Trading cryptocurrency

Emma bought 50 Litecoin in 2021 and paid $6,000. In 2022, she decides to exchange 20 of her Litecoin for 1.2 Ethereum. At the time of this transaction, 1.2 Ethereum was valued at $4,000. Now, how can Emma calculate her capital gains?

We already know the value of her sales proceeds which are $4,000. The original acquisition price (cost basis) can be found as 20 / 50 * $6,000 = $2,400. Her capital gains are then found as $4,000 – $2,400 = $1,600. 50% of the gains ($800) are considered taxable capital gains which Emma needs to report on her tax return.

Is selling cryptocurrency taxed in Canada?

Yes, selling cryptocurrency such as bitcoin for fiat currency (eg. CAD) is considered a taxable event in Canada. If you have done so, you will need to calculate the capital gains for each transaction and report this in your tax return.

Note: The CRA states clearly that each individual cryptocurrency is a separate asset and should be valued separately.

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Tax status:

Capital gains/business income

Example 2: Selling cryptocurrency

Jacob bought 0.4 BTC for $2,000 in 2017. One year later he buys 0.2 BTC for $3,500. Now, Jacob owns a total of 0.6 BTC which he has paid a total of $5,500 for.

In January of 2020, Jacob decides to sell his entire investment. He sells 0.6 BTC and receives $7,000 in exchange. His transactions can be seen in the below table:

TypeDateAmountPriceCost BasisCapital Gains
Buy2017-06-080.4 BTC$2,000$2,000
Buy2018-04-170.2 BTC$3,500$3,500
Sell2020-01-280.6 BTC$7,000(?)(?)

To calculate his capital gains, Jacob needs to find the total cost basis for the 0.6 bitcoin he has sold. This is simply the total initial cost ($5,500) since he is now selling his entire investment. The total capital gain is then found as $7,000 – $5,500 = $1,500.

TypeDateAmountPriceCost BasisCapital Gains
Buy2017-06-080.4 BTC$2,000$2,000
Buy2018-04-170.2 BTC$3,500$3,500
Sell2020-01-280.6 BTC$7,000$5,500$1,500

Half of his capital gain is subject to tax (taxable capital gain = $750) which he needs to report on his tax return to the Canada Revenue Agency in 2021.

Taxes on margin and futures trading

It has become very popular to trade cryptocurrencies on margin in the last few years, and many popular crypto exchanges such as BitMEX, FTX, and Bybit offer this. Instead of buying or selling cryptocurrency that you actually own, margin trading lets you borrow funds from the exchange to speculate if the price will go up or down in the future. The former is often referred to as going long, while the latter is going short. Futures and derivates trading works in a similar fashion where you borrow funds when placing a purchase or sell order.

When you trade futures on an exchange like FTX, you will open a position each time you make a buy or sell order. When the position is closed, you will have made either a gain or loss.

This is how cryptocurrency margin and futures trading is taxed in Canada:

The Canada Revenue Agency has not yet issued tax guidance for the treatment of margin or futures trading specifically, but the safe approach is to include the gains or losses in your total earnings calculations. The profits will therefore be taxed as either capital gains or as business income.

A crypto tax solution like Coinpanda calculates your capital gains for margin trading automatically so you don’t have to do this manually.

blue tax icon

Tax status:

Capital gains/business income

For more information about how taxes on cryptocurrency margin and futures trading work, please refer to our detailed article that covers this topic in more detail.

Income from mining and staking in Canada

Mining of cryptocurrency

Cryptocurrency received as payment for mining is subject to tax treatment in almost all countries, with Canada being no exception. Again, the tax treatment depends on whether your mining activity is classified as a business or just a hobby. If you are mining crypto such as bitcoin or ethereum with the intention of making profits on a regular basis, you will most likely be considered conducting business activity and the crypto received will be taxed as business income.

You can normally deduct any directly associated costs like electricity and computer hardware from your mining income. You should also be aware that when you decide to sell the coins later, the sales proceeds will become part of your business income and be taxed as such.

If your mining activity is considered a hobby, you will only pay capital gains tax when you later sell the coins you have received. Because you didn’t pay anything for the coins originally, the cost basis should be considered as zero so that your capital gains are equal to the market value in CAD at the time when you sell the coins in the future.

The CRA says that it will be decided case by case if your activity is classified as a business or just a hobby.

blue tax icon

Tax status:

Capital gains/business income

Staking of cryptocurrency

The CRA has not released specific guidance for cryptocurrency received from staking. Because staking is similar in nature to mining of cryptocurrencies, the safest approach is to treat received coins from staking in a similar fashion to mining.

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Tax status:

Capital gains/business income

Other taxable transactions in Canada

We have so far covered some of the most typical cryptocurrency transactions you might have to consider when it comes to taxes in Canada. There are also many other different ways that you can either send or receive crypto. Below, we will comment briefly on the tax treatment of other transaction types and events not already mentioned.

Tax on Airdrops

An airdrop of cryptocurrency tokens is often done as part of a marketing or advertising campaign. In some cases, you will need to register before a deadline to become eligible to receive tokens. You may also receive tokens just from holding another cryptocurrency in your wallet or on an exchange.

The CRA has not issued specific guidance on the tax treatment of cryptocurrency airdrops, but a safe approach is to pay capital gains tax when you later decide to sell the coins since it’s not likely that the CRA will consider airdrops as business income. Similar to crypto received from mining, you should assume a cost basis equal to zero because you did not pay anything to acquire the coins.

blue tax icon

Tax status:

Capital gains

Tax on Hard Forks

Almost all blockchains, like the bitcoin blockchain, need to be updated from time to time. Such updates can result in a soft fork or hard fork. Updates that automatically get adopted by all participants are called soft forks. This does not result in the creation of new tokens or a new blockchain. A hard fork, on the other hand, can result in a blockchain split where new tokens come into existence.

Bitcoin Cash is an example of a hard fork where all miners could not agree on whether to adopt the proposed change or not, and the bitcoin blockchain was split as a result. Everyone that owned bitcoin at the exact time when the split happened would then receive an equal number of Bitcoin Cash.

The Canada Revenue Agency has not provided specific guidance on how cryptocurrency received from hard forks should be treated for tax purposes. Again, a safe approach is to pay capital gains tax when you later decide to sell the coins and assume a cost basis equal to zero similar to airdrops explained above.

In most cases, Coinpanda classifies airdrops and hard forks automatically when you import your transactions from a wallet or exchange.

blue tax icon

Tax status:

Capital gains

Tax on ICOs & IEOs

ICOs (“Initial Coin Offerings”) and IEOs (“Initial Exchange Offerings”) are a popular form of raising capital by companies and projects launching their own blockchain or token. In both cases, a person typically invests in a token that will be released in the future and pays with another cryptocurrency like BTC, ETH, or USDT.

An IEO differs from an ICO by being held on an exchange, and the token is in most cases listed on the exchange shortly after the IEO has concluded.

The CRA has not provided specific guidance for the treatment of ICOs or IEOs, but since this is very similar to a crypto-to-crypto transaction, we can treat such transactions similarly for tax purposes. If you invest in token XYZ and pay with ETH, you will have to calculate capital gains on the ETH disposed of. You will need to use the fair market value of Ethereum on the date you made the investment which will also become the cost basis for the newly purchased tokens.

blue tax icon

Tax status:

Capital gains/business income

Gifting cryptocurrency

Gifting cryptocurrency is considered disposal equal to selling by the CRA. This means that you will pay capital gains tax if you gift crypto to a friend or family member. The capital gain should be calculated similarly to cryptocurrency sold on an exchange by subtracting the cost basis from the fair market value of the crypto asset on the date you made the transaction.

The cryptocurrency received by the other person will take on a cost basis equal to the fair market value on the date of the transaction. Assuming that the price of the cryptocurrency appreciates in the future, he or she will pay capital gains tax if deciding to sell the coins later.

blue tax icon

Tax status:

Capital gains

Cryptocurrency donations

Donating cryptocurrency is tax-free in Canada as long as the donation is made to a registered charitable organization. See the Government of Canada’s website for a list of registered organizations.

blue tax icon

Tax status:

Not taxed

Earned interest

The CRA has not mentioned the tax treatment of crypto received as interest specifically. Again, a safe approach is to apply the same practice as used for cryptocurrency received from mining or staking. This means you will calculate capital gains only when you sell the coins in the future and assume an acquisition cost equal to zero. Keep in mind that the CRA might consider this business income if you are earning interest on a regular basis.

blue tax icon

Tax status:

Capital gains/business income

Salary paid out in cryptocurrency

Today, some employers are paying salaries in cryptocurrency directly instead of a fiat currency such as CAD to their employees. The CRA states that crypto received as payment for salary or wages will be included in the employee’s normal income. This means you need to pay income tax according to subsection 5(1) of the Income Tax Act.

The same rules can be assumed to apply to both employees and freelancers. In both cases, the fair market value is determined on the date of receipt.

blue tax icon

Tax status:

Business income

Superficial loss rule

To prevent investors from taking advantage of capital losses, the CRA has put the superficial loss rule in place. Section 54 of the Income Tax Act indicates that a superficial loss occurs from selling cryptocurrency when both of the following two conditions are met:

  1. During the period that begins 30 days before and ends 30 days after the disposition, the taxpayer or a person affiliated with the taxpayer acquires a property (in this definition referred to as the “substituted property”) that is, or is identical to, the particular property, and
  2. At the end of that period, the taxpayer or a person affiliated with the taxpayer owns or had a right to acquire the substituted property,

This might sound confusing, but simply put it means that a capital loss cannot be claimed if you buy the same cryptocurrency either 30 days prior to or after the disposition when it was sold. Without this rule, a taxpayer could reduce his or her tax burden by selling a cryptocurrency and triggering a capital loss, then immediately buying it back shortly after.

It is important to mention that it is not illegal to buy back the same cryptocurrency shortly after you have sold it. However, you need to make sure you are not claiming a capital loss for transactions where the superficial loss rule kicks in.

If you want to avoid the superficial loss rule altogether, you simply need to wait. You will need to wait at least 30 days before you sell a cryptocurrency after purchasing it, and also 30 days before you buy back the same cryptocurrency you have sold.

To learn more about how the superficial loss rule works, please refer to our detailed article which also includes several examples:

Foreign property

If you during any time of the year hold specified foreign property valued greater than CAD 100,000, you are required to report this by filing a Foreign Income Verification Statement. This also applies to cryptocurrencies which means you need to file this form if the total value of your crypto assets exceeds the threshold anytime during the tax year.

How to minimize your taxable gains

There are several ways you can minimize your taxable gains and tax liability. In this section, we will look at the three most commonly used methods that are allowed in Canada.

1. Deduct cryptocurrency losses

If you sell a cryptocurrency and receive less than the calculated acquisition cost using ACB, you will have realized a capital loss on the asset. Such losses can be used to not only offset your total capital gains for cryptocurrencies but also capital gains for other capital assets like equities or index funds.

It’s important to be aware that capital losses cannot always be claimed due to the superficial loss rule already discussed. Also, you are allowed to deduct only 50% of the losses, similar to how you are paying capital gains tax on only 50% of your total gains.

2. Trading fees

Most exchanges charge trading fees when you buy, sell, or trade cryptocurrency. Trading fees are considered costs that can be deducted from the sales proceeds amount.

If you have a large number of transactions, deducting the fee amount can make a significant impact on your total tax liability. Most crypto tax solutions like Coinpanda do this automatically for you.

3. Lost and stolen cryptocurrencies

It is not clear today how the CRA treats lost or stolen cryptocurrency. However, most countries allow the taxpayer to deduct the original cost from their capital gains if they have been a victim of fraudulent actions or permanently lost access to their private keys.

We recommend that you ask a certified tax professional in Canada before reporting this in your tax return.

How to calculate total earnings from cryptocurrency

Figuring out your crypto taxes might feel overwhelming at first, but hopefully, it’s a bit clearer after reading this guide. So far, we have explained the different tax rules for cryptocurrency issued by the CRA, but you might still be wondering how to actually do all the required calculations so that you can report your taxes correctly and avoid penalties.

Basically, there are two different methods you can use which we will explain next.

Let’s start with the most time-consuming method…

Manually calculating your cryptocurrency taxes

Filing and reporting cryptocurrency taxes can be summarized in the following four steps:

  1. Download the transaction history from all exchanges where you have bought, sold, or received any cryptocurrency. It is important to include the history for ALL previous years to calculate your cost basis correctly.
  2. Calculate the cost basis for every single transaction where cryptocurrency is disposed of according to the Adjusted Cost Base and the superficial loss rule.
  3. Calculate the proceeds and resulting capital gains for all transactions that are considered taxable disposals by the CRA.
  4. Summarize all the calculations to find the total capital gains during the tax year.

This can be a very tedious and complicated process for most people that have had more than a few transactions during the year.

Calculating your crypto taxes using crypto tax software

The best option for most people is likely going to be using cryptocurrency tax software to do the calculations for them. If you want to save both time and money, here is how you can use Coinpanda to sort out your crypto tax situation and generate all the required tax reports automatically:

1. Sign up for a 100% free account

It is 100% free to create a Coinpanda account and you don’t need to enter any credit card information to get started. The free plan lets you explore and use all features for free.

Sign up with Coinpanda for free now!

dashboard 2022
The Coinpanda dashboard page

2. Connect all your exchange accounts and wallets

Coinpanda supports more than 500+ exchanges, wallets, and blockchains today. You can easily import all your transactions by connecting your exchange accounts with API keys or by uploading a CSV file with the transaction history. If you find that Coinpanda doesn’t support an exchange you have used, reach out to us so we can add the integration (usually within a few days).

3. Wait for Coinpanda to crunch all the numbers

Get yourself a cup of your favorite beverage and wait for Coinpanda’s sophisticated calculation engine to crunch all the numbers for you. Coinpanda will automatically calculate the cost basis, proceeds, capital gains, and taxable income for all your transactions! This might take anywhere from 20 seconds to 10 minutes depending on how many transactions you have.

4. Check for any reported warnings

Coinpanda will automatically display a warning if it appears that one or more transactions are missing such that the cost basis calculations will not include the total purchase price. If you see any warnings, you should first double-check that you have in fact connected all your wallets and exchange accounts.

Do you still see any warnings? Fear not! We have written an extensive list of help articles that will guide you through the entire process of making sure your crypto tax reports are as accurate as possible. If you still need any help, the best way to get in touch with our customer support and tax experts is through live chat.

5. Download your tax reports and tax forms

When you have successfully imported all transactions, the final step is to download the tax reports and tax forms you need to file your taxes. Coinpanda’s tax plans start at $49 and you have lifetime access to all reports after upgrading.

Support for Adjusted Cost Base

At the time of writing, Coinpanda is one of very few crypto tax solutions today that can calculate cost basis correctly for Canada according to rules for Adjusted Cost Base and the Superficial Loss Rule.

It is 100% free to create an account and see if the software works for you.

How to file your crypto tax reports

If you are filing your taxes with TurboTax, simply start by logging in to your Coinpanda account to export the TurboTax CSV file which includes all your capital gains transactions. You can also file your taxes by completing a paper tax return.

Earnings from cryptocurrency should be reported together with your Income Tax Return. There are two forms on which you might have to report your crypto taxes:

  • Schedule 3: This form should include all your capital gains and losses
  • Income Tax Return T1: Income paid in cryptocurrency

Crypto tax deadline in Canada

The deadline for reporting cryptocurrency taxes in Canada is the same as the deadline for your ordinary tax return. The tax return deadline in Canada is the 30th of April every year. The financial year is the same as the calendar year and runs therefore from the 1st of January until the 31st of December.

The tax return for 2021 needs to be filed by the 30th of April 2022. You need to report both your income and capital gains from cryptocurrencies in your tax return to the CRA.

Similarly, your crypto taxes for the 2022 financial year must be filed by the 30th of April 2023.

Record-keeping of transactions

The CRA puts the responsibility of keeping records of all transactions on the taxpayer itself. Many cryptocurrency exchanges keep these records for a limited time only, so you should make it a habit to periodically export and save this information. You are required to keep records of all transactions and supporting documents for a minimum of six years following the last tax year they relate to.

As stated in the Guide for cryptocurrency users issued by the CRA, you should keep the following records on your transactions:

  • the date of the transactions
  • the receipts of purchase or transfer of cryptocurrency
  • the value of the cryptocurrency in Canadian dollars at the time of the transaction
  • the digital wallet records and cryptocurrency addresses
  • a description of the transaction
  • the exchange records
  • accounting and legal costs
  • the software costs related to managing your tax affairs

Coinpanda’s tax software can create a capital gains report with most of this information for you.

If you are mining cryptocurrency, remember to also keep the following records:

  • receipts for the purchase of cryptocurrency mining hardware
  • receipts to support your expenses and other records associated with the mining operation (such as power costs, mining pool fees, and maintenance costs)
  • the mining pool details and records

Conclusion

After reading this guide is should be no doubt that tax authorities around the world including the CRA are now enforcing strict measures so that individuals have to report and pay their taxes from profits arising from cryptocurrency.

Here are some of the key points from this guide:

  • Buying (and paying with fiat currency) and transferring crypto between wallets is tax-free
  • Selling, trading, swapping, and margin trading is taxed as capital gains
  • Cryptocurrency received from mining, staking, airdrops, etc is taxed when you sell the coins later
  • The CRA considers earnings from cryptocurrency to be classified as either business income or capital gains and is taxed differently

If you have been using different exchanges like Coinsquare or Shakepay it will quickly become very challenging to report your crypto taxes manually. That’s why we built Coinpanda which today has helped more than 40,000+ cryptocurrency traders solve their tax problems. Not only can you import transactions automatically from all exchanges and blockchains that exist today, but the software also allows you to download a specific tax report for Canada.

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