1. How the CRA classifies crypto

The Canada Revenue Agency treats cryptocurrency as a commodity under the Income Tax Act. That means:

• Crypto is not legal tender — using it to buy a coffee is a barter transaction
• Each disposition triggers a tax event
• Two possible treatments: capital gain (most personal investors) or business income (active trading or mining as a business)

2. Taxable events (every Canadian needs to know)

• Selling crypto for CAD (or any fiat)
• Trading one crypto for another (BTC → ETH = sale of BTC at fair market value in CAD)
• Using crypto to pay for goods or services
• Gifting crypto to anyone other than your spouse
• Receiving crypto from mining, staking, or airdrops

3. Non-taxable events

• Buying crypto with CAD and holding it
• Transferring crypto between your own wallets
• Donating to a registered charity (deductible)
• Gifting to your spouse (attribution rules apply later)

4. The 2026 inclusion rates

After the June 2024 federal budget, capital-gains inclusion for individuals is:

• 50% on the first $250,000 of total annual capital gains
• 66.67% on the portion above $250,000

The threshold applies once per individual per year across all capital gains (crypto + stocks + real estate other than principal residence), not separately for each asset class. Test your numbers with the crypto tax calculator and the capital gains calculator.

5. Business income vs capital gains — which applies to you?

The CRA decides this based on facts, not your preference. Indicators of business income (100% taxable):

• High frequency of trades (hundreds per year)
• Short holding periods (days to weeks)
• Specialized knowledge or use of trading bots
• Time and effort spent on the activity (full-time or near-full-time)
• Mining as a commercial activity

If three or more of those describe your activity, the CRA will likely treat you as a business. The trade-off: 100% inclusion on gains, but 100% deductibility on losses, and you can deduct expenses (electricity for mining, software, exchange fees).

6. Adjusted Cost Base (ACB) — the line that trips everyone up

ACB = total CAD cost across all your purchases of a particular crypto, divided by total units held. Each new buy averages into the ACB. Each disposition uses that average ACB.

Example: You buy 0.5 BTC at $40,000 CAD and another 0.5 BTC at $60,000 CAD. ACB = ($20,000 + $30,000) / 1.0 BTC = $50,000/BTC. Sell 0.3 BTC at $80,000/BTC: proceeds = $24,000, ACB used = $15,000, capital gain = $9,000.

Exchanges do not track ACB across platforms or wallets. You need a spreadsheet or a tool like Koinly, CoinTracker, or CryptoTaxCalculator. We use a spreadsheet for under 100 trades; software for more.

7. The 30-day superficial loss rule

If you sell at a loss and re-buy the same crypto within 30 days before or after the sale, the loss is denied — added instead to your new ACB. This catches a lot of "tax-loss harvesting" attempts. The rule applies across spouses, RRSPs, and corporations you control.

8. Form T1135 — foreign property reporting

If at any point during the year your foreign-held crypto cost more than $100,000 CAD, you must file Form T1135. "Foreign-held" includes:

• Crypto on foreign exchanges (Binance, Kraken, Coinbase US, KuCoin)
• Crypto in non-Canadian custodial wallets
• Self-custody wallets are not foreign property (your Ledger sits with you)

Penalties for missing T1135: $25/day, minimum $100, maximum $2,500. Repeat offences and gross-negligence multiply this fast.

9. NFTs, staking, mining, airdrops

• NFTs: Same as crypto — capital gain on sale, ACB tracking applies. Selling for less than ACB = capital loss.
• Staking rewards: Taxable as income at fair market value when received. Sale later → capital gain on appreciation from FMV.
• Mining: If hobby — non-taxable income, but no expense deductions either, and the coins are taxable when sold (ACB = $0 if hobby). If business — 100% taxable on FMV at receipt, expenses deductible. See staking and mining tax guide.
• Airdrops: Taxable as income at FMV on receipt date.

10. How to report on your tax return

1. Capital-gains investors: List each disposition on Schedule 3. Total taxable gain flows to Line 12700 of the T1.
2. Business-income filers: File Form T2125 for the activity. Add to Line 13500 or 13700.
3. T1135 filers: File separately, due on the same date as T1.
4. NETFILE: All major Canadian tax software supports crypto reporting — Wealthsimple Tax, TurboTax, UFile.

See: Wealthsimple Tax vs TurboTax vs UFile 2026.

11. Strategies to legally reduce crypto tax

• Hold spot crypto ETFs in a TFSA / RRSP / FHSA. BTCC, ETHX, MAXI all qualify. Gains are sheltered.
• Tax-loss harvest before Dec 31, mindful of the 30-day rule.
• Donate appreciated crypto directly to a registered charity — no capital gain + tax credit on the FMV.
• Match disposition timing with low-income years (after a job loss, parental leave, etc.).
• Use the lifetime capital-gains exemption for QSBC shares — does not apply to crypto, but if you hold both, plan harvesting carefully.

12. Filing checklist

1. Export full transaction history from every exchange and wallet
2. Calculate ACB per coin (spreadsheet or software)
3. Categorize: dispositions, transfers (non-taxable), staking/airdrop income
4. Determine treatment: capital vs business
5. Schedule 3 entries → Line 12700 (or T2125 → Line 13500)
6. Form T1135 if foreign-held cost > $100K at any point
7. NETFILE before April 30, 2026
8. Keep records 6 years post-filing

Related guides

• Crypto Tax Hub — all guides + calculator
• How CRA tracks your crypto in 2026
• Crypto staking + mining tax in Canada 2026
• Crypto Tax Calculator

Not tax advice. Crypto tax is fact-driven and the CRA's interpretation can change. Consult a CPA familiar with crypto for any non-trivial situation. Last reviewed: April 22, 2026.