The Canada Revenue Agency (CRA) has been very clear: crypto is not “play money” — it’s a taxable asset.
Whether you’re investing, trading, staking, or mining, your activity may be taxed as either capital gains or business income. Getting this classification right is crucial because it can make a huge difference to your tax bill 💸.
🔎 How the CRA Views Crypto
- Crypto is classified as a commodity (not legal tender).
- Transactions involving crypto are usually considered barter transactions for tax purposes.
- Depending on your activity, profits can be taxed as:
- Capital gains (investment activity)
- Business income (frequent/organized trading, mining, staking, etc.)
💰 Capital Gains Tax on Crypto
- Only 50% of your capital gains are taxable.
- Example: You made CAD $10,000 profit on Bitcoin → CAD $5,000 is taxable.
- You include that in your income and pay tax at your marginal rate.
Disposals include:
- Selling crypto for CAD 💵
- Swapping crypto for another token 🔄
- Spending crypto on goods/services 🛒
Example:
- Buy ETH for CAD $2,000.
- Sell for CAD $6,000.
- Profit = CAD $4,000 → only CAD $2,000 is taxable.
🧾 Income Tax on Crypto
If your activity looks more like a business, the CRA may classify it as income instead of capital gains.
That can apply if you:
- Trade frequently, with intention to profit.
- Operate mining at scale.
- Earn regular staking/yield rewards.
👉 Business income is 100% taxable, not just 50% like capital gains.
🎨 NFTs, DeFi & Airdrops
- NFTs – selling NFTs you created = business income. Trading NFTs = capital gains (unless frequent enough to be business).
- DeFi rewards – usually taxed as income when received; later disposal = capital gains.
- Airdrops – if received as part of a business = income. If occasional, may be treated as a windfall (not taxable until sold).
📉 Losses
- Capital losses can offset capital gains (but not regular income).
- Business losses can offset other types of income.
- Accurate classification matters here — misreporting can cost you.
🕵️ CRA Enforcement in 2025
- CRA actively audits crypto users and requests exchange records.
- Global data-sharing agreements (like the OECD’s CARF) are expanding.
- Not reporting crypto gains can lead to back taxes, penalties, and even fraud charges.
🛠️ Compliance Checklist
- Keep detailed records – dates, amounts, FMV in CAD, wallet addresses.
- Separate capital vs business activity – document your intent.
- File accurately – report on your annual return (Schedule 3 for capital gains, Form T2125 for business income).
- Don’t ignore DeFi, NFTs, or staking – they all count.
✅ Key Takeaways (Canada)
- Crypto = commodity, taxed as capital gains or business income.
- Capital gains: only 50% taxable. Business income: 100% taxable.
- DeFi, staking, and frequent trading often fall under business income.
- CRA is auditing heavily in 2025 — record-keeping is critical.