One Move That Could Cut Your Bitcoin Tax Bill

Tax season always feels far away until suddenly it is not.
And if you bought, sold, or swapped Bitcoin this year, there is one move you can still make before December 31 that could legally shrink your 2025 tax bill.

It is called tax-loss harvesting.

This strategy has been around forever in traditional investing, but it is rarely explained for Bitcoin investors in Canada.

So let’s break it down in plain English. We will look at how it works, specific traps to avoid, and how to use it without accidentally cancelling the tax loss benefit.

What Tax-Loss Harvesting Actually Means for Bitcoin Investors

At its core, tax-loss harvesting is simple.

You sell Bitcoin that has dropped in value, realize the loss, and use that loss to reduce the taxable gains from other Bitcoin you sold this year.

Here is what every Canadian Bitcoin investor should know:

1. Bitcoin is taxed as a commodity, not a currency.

Every time Bitcoin leaves your wallet for something other than the same Bitcoin, such as selling, swapping, or spending, that is a taxable event.

2. Only half of your net capital gains are taxable.

For 2025, the capital gains inclusion rate remains 50%.
Reduce your gains, and you reduce the taxable amount even more.

3. Losses are not wasted.

You can carry capital losses back three years or forward indefinitely.
If this was not your year for gains, you can bank the loss for later.

4. Timing matters.

If you want the loss to count for your 2025 tax return, the sale must happen before December 31.

Miss that deadline and you lose the opportunity for this tax year. Period.

A Simple Example of How Tax-Loss Harvesting Works

Let’s say you bought an altcoin during the hype. No judgment. We have all been there.

You paid $5,000. Today it is worth $1,500, which is an unrealized $3,500 loss staring you in the face.

Earlier this year, you also sold some Bitcoin at a profit.
You realized $10,000 in gains when BTC was pumping.

Here is the move:

You sell the underperforming altcoin before December 31 and realize the $3,500 loss.
You then use that loss to offset your $10,000 Bitcoin gain.

Your taxable gain drops from $10,000 to $6,500.

With a 50? Inclusion rate, you are only paying tax on half your net gains.
So instead of being taxed on $6,500 of income, you are taxed on $3,250 of income.

But this only works if you execute before December 31. Miss that deadline and the opportunity is gone for 2025.

The Trap That Cancels Your Loss Entirely

It is called the Superficial Loss Rule.

The rule says:

A superficial loss happens when you sell bitcoin or other capital property at a loss, and both of the following are true:

You or someone affiliated with you buys the same or an identical asset
at any time in the 30 days before or the 30 days after the sale.
(This includes anything that gives you the right to buy it, such as an option.)
You or the affiliated person still own that asset 30 days after the sale.
If you still hold any of the substituted property on day 30, the CRA considers the loss superficial.

That is a 61-day window.

Break that rule even once, and the tax benefit disappears.

Here is how this plays out with real clients every December.

How to Do It Right and Wrong

The Clean Win, Loss the CRA Accepts

In early November, Sarah bought some BTC.
On December 10, she sold that lot at a loss.
Then she did not buy Bitcoin again for 31 days after the sale.

No buys in the 30 days before.
No buys in the 30 days after.

This is a valid loss. It is exactly what the rule is designed for.

The Common Mistake: Buying the Dip Too Soon

Jason sells Bitcoin at a loss on December 10.
All good so far.

Then BTC dips.
He buys the dip on December 20.

That purchase is inside the 30-day window after the sale, which means the CRA marks the loss as superficial.

Loss denied.

What Actually Counts as a Taxable Event?

Quick refresher, because this alone clears up half the confusion.

Taxable:

Selling Bitcoin for CAD
Swapping BTC for another token
Gifting Bitcoin

Not taxable:

Moving BTC between your own wallets
Transferring Bitcoin between exchanges
Holding Bitcoin (HODLing)

Rule of thumb:
If Bitcoin left your wallet for something other than the same Bitcoin, it is likely taxable.

How to Stay Clean and Avoid a CRA Headache

Before tax loss harvesting:

1. Check the 30 days before your sale.

Any BTC buys inside that window matter.

2. Wait at least 31 days before buying Bitcoin again.

Otherwise, the entire benefit can disappear.

3. Keep clean records.

Download CSVs from every exchange.
Track what you bought, what you sold, and when.
Clean documentation is one of the best ways to stay CRA-ready in Canada.

4. Reach out to a Canadian tax professional.

Tax loss harvesting is simple, but the timing, ACB tracking, and superficial loss rule can still trip people up.
If something feels off, get support before you file. Your future self will thank you.

Keeping More of Your Bitcoin, Legally

Tax-loss harvesting is not complicated, but it is precise.

Do it with intention, stay inside the rules, and this single move can legally reduce your Bitcoin tax bill for 2025.

Here is to more Bitcoin profits minus the tax stress,
Charlene Tessier (Canadian Crypto Tax Expert)

If you want more clarity as you head into tax season, here are a few resources to help you stay ahead.

Website:
https://www.strengthinnumbers.business/

Get the “Is It Taxable?” Canadian Bitcoin Taxable Cheat Sheet.

https://www.strengthinnumbers.business/cheat-sheet

LinkedIn:

https://www.linkedin.com/in/charlenetessier/

YouTube:

https://www.youtube.com/@canadiancryptotax

Sources:

CRA Capital Gains Regulations: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/capital-losses-deductions.html#toc7

Disclaimer:

The information in this article is for educational purposes only and does not constitute financial, tax, or legal advice. It does not account for any specific investor’s circumstances and may not be suitable for all. Please consult a qualified professional who understands your individual situation before making.