Complete Guide to Crypto Taxes in Canada (2024)

Crypto taxes, in most jurisdictions, often have unclear guidelines.

But we have made the subject of crypto taxes in Canada simple for you in this article.

Do You Get Taxed on Crypto in Canada?

Canada is one of a growing number of countries in which you are obligated to pay tax on your crypto assets. When, and how much, you get taxed will be the result of a range of factors.

While this article does not provide tax advice, we have rounded up official sources in order to present a clear explanation of how cryptocurrency is taxed in Canada in 2023.

As in many jurisdictions across the world, crypto tax regulation is often unclear in Canada. This is largely the result of regulators attempting to apply existing tax frameworks to an entirely new form of technology and asset. Still, official Canadian government resources do provide insight into how crypto is currently taxed in the country.

According to the Canadian Revenue Agency (CRA), crypto assets are not seen as legal tender. Rather, they are treated “like a commodity for purposes of the Income Tax Act.” 

Importantly, holding crypto is not a taxable event in and of itself. Rather, it is when you sell, gift, purchase goods, or sell cryptocurrency for Canadian dollars that you may be subject to tax obligations.

The CRA states that income from cryptocurrency transactions in Canada is generally taxed as business income or subject to capital gains tax. Which of these tax obligations applies to you will depend on whether or not your crypto activities are classified as business activities.

On the other hand, a transaction in which crypto is used to buy goods and services is classified as a barter transaction.

How Much Is Crypto Taxed in Canada?

The rate at which cryptocurrencies are taxed in Canada depends on the specific circumstances in which they are sold, gifted, traded, or spent. 

One of the first things that you need to do is figure out if the income that you make from crypto is considered as business income. You only have to pay business income if you are carrying out business activities, which the CRA defines as:

• Carrying out activity for commercial reasons and in a commercially viable way
• Undertaking activities in a business like manner, which might include preparing a business plan and acquiring capital assets or inventory
• Promoting a product or service
• Intending to make a profit, even if you are unlikely to do so in the short term

Unfortunately, the rules that differentiate business and personal activities are not always that clear under the Canadian tax framework. The CRA states that each case must be evaluated on an individual basis. However, the tax authority does provide a few examples of business activities. These include cryptocurrency mining, crypto trading, and operating crypto exchanges.

Even a single instance of trading with the intent to make a profit, the CRA states, could be subject to the taxes that apply to business income.

Otherwise, when it comes to non-business income earned from crypto in Canada, you will be subject to capital gains tax. This is traditionally reported in your normal income tax return for the year. 

By halving the gains you earned from personal crypto activities during the tax year, you are left with what is known as your “taxable capital gain”. Only your taxable capital gain—meaning 50% of what you earned from crypto—is subject to capital gains tax. 

Your taxable capital gain is added to your income. It is then taxed at the normal tax rate that you pay on your income taxes in Canada based on your tax bracket.

Do You Pay Taxes on Crypto Losses in Canada?

You do not pay taxes on your crypto losses in Canada. In fact, crypto losses can actually offset the amount of taxable capital gain that you have to pay. 

Per the CRA, any capital losses resulting from the sale of crypto can be offset against capital gains. 

It is important to note, however, that crypto losses cannot be offset against any other kind of income (such as your salary).

Do I Pay Tax on My Crypto If I Don’t Sell?

In Canada, crypto activities such as buying and holding crypto are not taxed. In other words, you do not have to pay taxes on your crypto holdings if you do not sell them.

When it comes to projects like PulseChain, this actually presents an opportunity for people to earn crypto in Canada without encountering a taxable event. 

PulseChain allows users to earn a stablecoin known as USDL when they put forth Pulse (PLS) tokens as collateral. Through this process, users can extract value from their holdings. 

Since buying and holding digital assets is not a taxable event under the current tax framework in Canada, PulseChain allows you to extract value without having to pay capital gains tax as long as you do not sell your USDL tokens for a fiat currency as the Canadian dollar.

The State of Crypto Tax in Canada

While there are still many areas in which crypto tax obligations are not as easy to follow as they could be, these frameworks have come a long way from being as unclear or hostile as they once were.

In addition, educational resources and the increasing maturity of the crypto industry has made it a lot easier to stay on the right side of your crypto tax obligations.

Still, when it comes to paying your crypto taxes in Canada, it is important to do your own research in order to find the tax guidelines that are most applicable to your specific circumstances. As always, it may also be worth consulting with tax professionals.