Canada, like most countries, has not put in place any specific crypto regulations or taxation regimes. It is regarded as a crypto friendly country, although many provinces are vary of the implications of crypto gaining popularity. Even so, Canada is a convenient place to be for crypto owners as the taxation system is simple and capital gains are taxed only on 50% of the gains.
Do you have to pay crypto tax in Canada?
Yes, crypto is taxed as property in Canada and thus, is subject to either capital gains tax or business income tax.
It is important to determine whether your transactions fall in capital gains or business income. Capital gains tax are levied only on the 50% of the total gain you make while business income is taxed on the total income amount.
When do you have to pay tax on crypto in Canada?
Crypto is taxed as capital gains, then any such transaction will be taxed.
It will be taxed as business income if you are a professional trader and engage in such transactions on a daily basis.
What crypto transactions are taxable in Canada?
- Selling crypto
- Spending crypto
What are the Crypto Tax Rates in Canada?
| Income (2023) | Income (2022) | Federal income tax bands (CAD) |
| On your first $53,359 of taxable income | On your first $50,197 of taxable income | 15% |
| $53,359 – $106,717 | $50,197 – $100,392 | 20.5% |
| $106,717 – $165,430 | $100,392 – $155,625 | 26% |
| $165,430 – $235,675 | $155,625 – $221,708 | 29% |
| $235,675+ | $221,708+ | 33% |
Canada Income Tax Brackets (2023)
| Income (2023) | Income (2022) | Federal income tax bands (CAD) |
| On your first $53,359 of taxable income | On your first $50,197 of taxable income | 15% |
| $53,359 – $106,717 | $50,197 – $100,392 | 20.5% |
| $106,717 – $165,430 | $100,392 – $155,625 | 26% |
| $165,430 – $235,675 | $155,625 – $221,708 | 29% |
| $235,675+ | $221,708+ | 33% |
Canada Capital Gain Tax Rates (2023)
| Income (2023) | Income (2022) | Federal income tax bands (CAD) |
| On your first $53,359 of taxable income | On your first $50,197 of taxable income | 15% |
| $53,359 – $106,717 | $50,197 – $100,392 | 20.5% |
| $106,717 – $165,430 | $100,392 – $155,625 | 26% |
| $165,430 – $235,675 | $155,625 – $221,708 | 29% |
| $235,675+ | $221,708+ | 33% |
How is Tax Calculated on Cryptocurrency in Canada?
For determining your capital gains, the gains you made in the sale of crypto have to be calculated. It is a tricky process as you might have bought the coins you are selling at different points in time and at different prices. This makes it difficult to figure the cost price that you will be taking into account to calculate your profit. For this, two methods are used globally: FIFO (First In First Out) and Average Cost Basis(ACB).
According to FIFO Method, you sell your oldest acquired coin first and cost is calculated according to the respective prices at which the coin was bought. Whereas, in ACB, time of buying doesnt matter and average cost is taken into account.
Let’s take an example,
Say you bought 2 BTC for $ 20,000 in 2020 and 4 BTC for $ 60,000 in 2021. Then you sold 4 BTC in 2022 for $ 1,00,000:
- FIFO METHOD
You sell 2 BTC from 2020 and 2 BTC from 2021. So cost price is:
= 20,000 + (2/4)*60,000
= $ 50,000
Profit = 1,00,000 – 50,000
= 50,000
Here, taxes are levied on 50% of total profit.
Taxable amount = $25,000.
- ACB METHOD:
All coins are of the same denomination. Therefore, cost price for one coin:
= (20,000 + 60,000)/6
= $ 13,333
So, cost price of 4 coins:
= $ 53,333
Profit = 1,00,000 – 53,333
= 46,666
Here, taxes are levied on 50% of total profit.
Taxable amount = $ 23,333.
Is there any Crypto Tax Free in Canada?
- Buying and holding is not taxable in Canada.
Crypto Tax in Canada – FAQs
Do you have to pay tax when you buy crypto in Canada?
No, you don’t have to pay tax when you buy crypto in Canada.
Do you have to pay tax when you sell crypto in Canada?
Yes, you have to pay tax when you sell crypto in Canada.
Do you have to pay tax when transferring crypto in Canada?
No, you don’t have to pay tax when transferring crypto in Canada.
Do you have to pay tax when spending crypto in Canada?
Yes, you have to pay tax when spending crypto in Canada.
Is swapping crypto taxable?
Swapping crypto should be taxable in Canada.
How much tax on crypto gains in Canada?
| Income (2023) | Income (2022) | Federal income tax bands (CAD) |
| On your first $53,359 of taxable income | On your first $50,197 of taxable income | 15% |
| $53,359 – $106,717 | $50,197 – $100,392 | 20.5% |
| $106,717 – $165,430 | $100,392 – $155,625 | 26% |
| $165,430 – $235,675 | $155,625 – $221,708 | 29% |
| $235,675+ | $221,708+ | 33% |
How do I avoid capital gains tax on crypto in Canada?
Hold crypto for longer periods of time and benefit from loss harvest.
Market Research Intern, Octaloop
Maitreyee takes a keen interest in financial technologies and their potential to transform lives at the grassroots. Put together with her penchant for Economic Research, she brings tonnes of academic and actionable insight into our products. Maitreyee is contributing at Binamite as a Market Research Intern, and when she's not doing that, you can find her exploring the city or buried in a book.