Bitcoin Taxes in Canada: The Ultimate Guide
Bitcoin is subject to taxes in Canada, with investors required to pay federal income taxes on their gains and income.
Discover how Canada taxes Bitcoin, how to benefit from a 50% discount on capital gains, how to report Bitcoin taxes, required tax forms, and more!
Post sponsored by CoinTracking. Track your Bitcoin investments and generate a tax report in one simple app.
Key Takeaways about Bitcoin Taxes in Canada
Bitcoin is classified as property in Canada and subject to taxes.
Gains from Bitcoin are subject to federal income taxes for individuals.
Businesses pay business income taxes on their Bitcoin trading gains.
Individuals benefit from a 50% tax discount on capital gains, per the Canada Revenue Agency (CRA).
Bitcoin taxes must be filed annually using forms like Schedule 3.
CoinTracking is the easiest way to track Bitcoin trades, calculate gains, and generate tax forms.
Is Bitcoin Taxed in Canada?
Bitcoin trading in Canada is taxed at the federal income tax level.
For individuals, gains from trading or spending Bitcoin fall under income taxes.
Businesses dealing with Bitcoin pay business income taxes on their activities.
CRA Resource Links
How is Bitcoin Taxed in Canada?
Bitcoin taxes in Canada vary based on activity, ranging from capital gains to business income taxes. Here’s how it works:
Capital Gains Tax
Gains from Bitcoin trading are subject to capital gains tax, with rates based on your federal income bracket. Individuals receive a 50% discount on taxable gains. For example, a $5,000 gain is taxed on only $2,500.
Income Tax
Trading or spending Bitcoin (e.g., buying goods/services) triggers income taxes. The gain on each transaction is taxed according to your federal income bracket.
Business Income vs. Capital Gain
Businesses are taxed on 100% of Bitcoin gains as business income, while individuals benefit from the 50% capital gains discount.
Bitcoin Tax Rates in Canada for 2025
Below are the tax rates for Bitcoin in 2025:
Overview of Bitcoin Tax Rates
Capital Gains Tax Rates
Capital gains tax rates align with federal income tax brackets, but only 50% of Bitcoin gains are taxable for individuals.
Income Tax Brackets
Income tax rates for Bitcoin transactions mirror the federal brackets above.
How to Calculate Gains on Bitcoin in Canada
Calculating Capital Gains
Taxable Bitcoin transactions include:
Selling Bitcoin for CAD or other currencies.
Spending Bitcoin on goods/services.
Gifting Bitcoin.
To calculate the gain:
Subtract the cost basis (purchase price + fees) from the sale proceeds.
The profit is taxed per federal income tax rates.
Income Tax Calculation
Determine the gain on Bitcoin transactions (e.g., trading, spending, gifting), taxed based on your federal income bracket (15%–33%).
Cost Basis Method
Include exchange and transaction fees in the cost basis to reduce taxable gains. For example:
Buy 1 Bitcoin at $60,000 with a $60 fee.
Cost basis = $60,060.
Sell for $65,000; gain = $65,000 – $60,060 = $4,940.
Taxed on 50% of $4,940 ($2,470).
What Bitcoin Transactions Are Tax-Free in Canada?
Tax-free Bitcoin transactions include:
Holding Bitcoin without selling.
Transferring Bitcoin between personal wallets.
Buying Bitcoin with CAD.
Specific Bitcoin Transactions and Their Tax Implications
Bitcoin-to-CAD
Selling Bitcoin for CAD triggers a capital gains tax event. Calculate the gain and pay taxes based on your income bracket.
Buy and HODL
Buying Bitcoin with CAD is tax-free. Holding Bitcoin without selling or spending is also tax-free.
Bitcoin-to-Bitcoin Trades
Trading Bitcoin for another cryptocurrency is taxable. Calculate the gain and pay income taxes.
Tax on Bitcoin Activities
Staking
Bitcoin does not typically involve staking, but if applicable (e.g., wrapped Bitcoin), staking rewards are taxed as income at their Fair Market Value (FMV) when received. Selling rewards triggers capital gains tax.
Mining
Bitcoin mining rewards are taxed as capital gains when sold, not when received. The sale proceeds are taxed based on your income bracket.
Lost or Stolen Bitcoin
Losses from stolen Bitcoin may be deductible as personal property losses. Consult a tax professional, as CRA guidance is limited.
Gifts and Donations
Gifting or donating Bitcoin is a taxable disposal. Calculate the gain and pay capital gains tax. Donations may have additional tax rules.
How to Report Bitcoin Taxes in Canada
Required Forms and Documentation
File the following forms:
Schedule 3: Report capital gains from Bitcoin.
T1 Income Tax Return: Report Bitcoin income.
Businesses file Form T2125.
Filing Deadlines
Bitcoin taxes for 2025 are due by April 30, 2025. Prepare early to avoid penalties.
Correcting Previous Reporting Errors
Correct errors via amended income tax returns or voluntary disclosures to avoid penalties.
Reduce Your Bitcoin Taxes in Canada
Hold Bitcoin
Long-term holding defers taxes and may lead to higher price appreciation.
Tax-Free Savings Account (TFSA)
Invest in Bitcoin ETFs or futures via a TFSA for tax-free gains. The 2024 contribution limit is $7,000.
Registered Retirement Savings Plan (RRSP)
RRSP contributions for Bitcoin-related investments offer tax deductions.
Offset and Harvest Losses
Offset 50% of Bitcoin losses against capital gains to reduce taxable income.
Business Deductions
Businesses can deduct Bitcoin-related expenses to lower taxable profits.
The CRA & Bitcoin
The CRA tracks Bitcoin investors through collaborations with global tax authorities and crypto exchanges. Non-compliance risks penalties.
Can the CRA Track Bitcoin?
Yes, the CRA uses advanced technology and partnerships to monitor Bitcoin transactions.
What Bitcoin Records Will the CRA Want?
Maintain records of:
Purchase/sale dates and amounts.
Cost basis (including fees).
Sale proceeds.
FMV of Bitcoin received (e.g., mining).
Frequently Asked Questions about Bitcoin Taxes in Canada
Is Bitcoin Legal in Canada?
Yes, Bitcoin is legal for trading, spending, and earning.
Is Bitcoin Taxable in Canada?
Yes, Bitcoin gains and income are taxable.
What Happens if I Don’t Report My Bitcoin Taxes?
Non-reporting risks penalties, fines, or audits by the CRA.
Is Holding Bitcoin Taxed?
No, holding Bitcoin is tax-free until sold or spent.
Conclusion on Bitcoin Taxes in Canada
Bitcoin gains are taxed in Canada based on federal income tax brackets, with individuals benefiting from a 50% capital gains discount.
Businesses are taxed on 100% of gains. Use tools like CoinTracking to track transactions and generate tax forms by the April 30, 2025 deadline.
Summary of Key Points
Selling Bitcoin triggers capital gains taxes on 50% of gains for individuals.
Tax rates range from 15%–33% based on income.
Income from mining or other activities is taxed at FMV.
Report gains and income on Schedule 3 and T1 forms.
Holding or buying Bitcoin with CAD is tax-free.
CoinTracking simplifies tax reporting for Canadian Bitcoin investors.
Post sponsored by CoinTracking. Track your Bitcoin investments and generate a tax report in one simple app.