Crypto Tax Canada 2025: How to Report Bitcoin and Ethereum to the CRA

The CRA treats cryptocurrency as a commodity, not a currency. Every time you sell, trade, or spend crypto, that’s a taxable event. Buying and holding is fine — no tax there. But the moment you dispose of it, you owe.

Most Canadians who hold crypto as an investment will pay capital gains tax at a 50% inclusion rate. Some will owe tax on 100% of their profits as business income. The difference between those two outcomes can double your tax bill, so getting the classification right matters.

What Counts as a Taxable Event

Not everything you do with crypto triggers tax. Here’s the breakdown:

Taxable:

• Selling crypto for Canadian or US dollars (or any fiat currency)
• Trading one cryptocurrency for another (swapping ETH for SOL is a disposition of ETH)
• Using crypto to buy goods or services (that coffee you bought with Bitcoin was a taxable event)
• Receiving crypto as payment for work or services you provided

Not taxable:

• Buying crypto with Canadian dollars
• Transferring crypto between your own wallets (moving BTC from Coinbase to a hardware wallet)
• Simply holding crypto — unrealized gains aren’t taxed

That second point trips people up. Swapping BTC for ETH feels like you’re just shuffling things around, but the CRA sees it as selling BTC at its fair market value and buying ETH. You need to calculate the gain or loss on the BTC at the time of the swap.

Capital Gains vs Business Income

This is the single most consequential question for crypto holders. The CRA doesn’t have a bright-line test. They look at your overall behaviour.

Capital gains treatment (50% taxable) applies if you:

• Buy and hold as a long-term investment
• Trade infrequently
• Don’t have specialized knowledge or training in trading
• Don’t spend significant time managing your portfolio

Business income treatment (100% taxable) applies if you:

• Trade frequently — daily or weekly
• Hold positions for short periods
• Have specialized knowledge of crypto markets
• Spend significant time analyzing and executing trades
• Use borrowed money to finance your trading

The CRA considers frequency of transactions, holding periods, knowledge of markets, time devoted to trading, financing used, and your stated intention at the time of purchase. There’s no magic number of trades that flips you from investor to business. It’s a holistic assessment.

Most people who bought some Bitcoin or Ethereum a few years ago and are now selling fall squarely into capital gains treatment. If you’re running algorithmic trading bots or day-trading full time, you’re likely in business income territory.

Calculate your tax on crypto gains —>

How ACB Works for Crypto

Adjusted Cost Base (ACB) is how you figure out your actual gain or loss. For crypto, the CRA requires the weighted average cost method.

Here’s how it works in practice:

You buy 1 BTC at $40,000. Later, you buy another 1 BTC at $60,000. Your total cost is $100,000 for 2 BTC. Your ACB per BTC is $50,000.

Now you sell 1 BTC for $70,000.

• Proceeds: $70,000
• ACB of 1 BTC: $50,000
• Capital gain: $20,000
• Taxable capital gain (50%): $10,000

That $10,000 gets added to your income and taxed at your marginal rate. If you’re in a 40% bracket, you’d owe $4,000 on that sale.

This gets complicated fast when you have dozens of purchases at different prices across multiple exchanges over several years. Which brings us to record-keeping.

Record-Keeping Is Non-Negotiable

The CRA expects you to track every single transaction. Date, time, amount of crypto, cost in CAD at the time, proceeds in CAD at the time of disposition. For every trade.

If you’ve been active in crypto for years and haven’t been tracking, you need to reconstruct your history. Most major exchanges let you download transaction histories. From there, tools like Koinly, CoinTracker, or CoinPanda can calculate your ACB and generate tax reports. A well-maintained spreadsheet works too, but it gets unwieldy past a few dozen transactions.

Don’t wait until April to sort this out. Pulling records from exchanges that may have changed their export formats (or shut down entirely) takes time.

Mining, Staking, and DeFi

Mining is generally treated as business income by the CRA. The fair market value of the crypto at the time you receive it is fully taxable as income. The costs of mining — electricity, hardware depreciation, internet — can be deducted as business expenses. If your mining is truly at a hobby level (you mined a tiny amount casually), there’s an argument for different treatment, but the CRA’s default position is that mining income is business income. Estimate your mining tax with the self-employed calculator —>

Staking rewards are likely taxable as income when received. The CRA hasn’t published definitive guidance specifically on staking, but the consensus among tax professionals is that staking rewards are taxed similarly to interest income — at their fair market value when they hit your wallet.

Airdrops are taxable at fair market value when received, even if you didn’t ask for them. If you receive tokens worth $500 through an airdrop, that’s $500 of income.

DeFi yields — liquidity pool rewards, yield farming, lending interest — are likely taxable as income when received. The specific treatment depends on the nature of the arrangement, but expect to pay tax on the fair market value of what you receive.

For all of these, you then have a new ACB for the received crypto. If you later sell those mined or staked coins at a higher price, you have an additional capital gain (or loss) to report.

CRA Is Paying Attention

Starting in the 2024 and 2025 tax years, the CRA has been including cryptocurrency-specific questions on tax returns. They’re asking whether you acquired, disposed of, or held crypto during the year.

Canadian exchanges are cooperating with the CRA, and international information-sharing agreements mean that offshore exchanges aren’t the shield they used to be. The CRA has specifically flagged crypto as an enforcement priority. Unreported crypto income is treated the same as any other unreported income — penalties, interest, and potential prosecution in serious cases.

If you have unreported crypto from prior years, consider a voluntary disclosure to the CRA before they come to you. The penalties are significantly reduced when you self-report.

See your full tax picture —>

Common Mistakes

Not reporting crypto-to-crypto trades. Swapping one coin for another is a disposition. Every swap needs to be reported.

Using FIFO instead of weighted average. The CRA requires the weighted average cost method for crypto in Canada. Using first-in-first-out (common in the US) will produce incorrect numbers.

Ignoring small transactions. That $50 NFT purchase or $20 swap still counts. The CRA expects all dispositions reported, regardless of size.

Assuming DeFi is invisible. Blockchain transactions are public and permanent. The CRA and third-party analytics firms can trace on-chain activity.

Not converting to CAD. All gains and losses must be reported in Canadian dollars, using the exchange rate at the time of each transaction. Don’t use year-end rates or rough estimates.

Related Guides

• Capital Gains Tax Canada 2025
• 2025 Tax Deadline Canada
• 9 Tax Changes for 2025