Buying bitcoin is not taxable
But you must track the CAD value of each purchase for future tax calculations.
Bitcoin taxes in Canada
Learn how bitcoin is taxed in Canada, how to calculate capital gains using Adjusted Cost Base (ACB), and how to report bitcoin on your taxes.
Bitcoin tax rules: simplified
The CRA has guidelines on how bitcoin is taxed in Canada. Here are the basics most Canadians need to know.
Selling bitcoin is taxable
Selling bitcoin for CAD almost always results in a capital gain or loss.
Trading bitcoin is taxable
Trading bitcoin for another crypto asset is considered a sale for tax purposes.
When do you pay tax on bitcoin?
In general, tax is triggered when you "dispose of" bitcoin; not when you buy, hold or move it.
You pay tax when you…
- Sell bitcoin
- Trade bitcoin for another crypto
- Gift bitcoin
- Earn bitcoin *
- Mine or stake bitcoin *
You do NOT pay tax when you…
- Buy bitcoin
- Hold bitcoin
- Transfer between your own wallets
- Move bitcoin between exchange accounts you own
* Likely taxed as business income rather than capital gains.
Bitcoin capital gains in Canada
If you are buying and holding bitcoin as an investment, your profits are normally taxed as capital gains.
What is a capital gain?
When you profit from selling your bitcoin, your capital gain is generally the difference between your adjusted cost base (ACB) and the proceeds you received from the sale.
Only 50% is taxable
In Canada, only half of your capital gain is added to your taxable income. We will show examples of this in subsequent sections.
What is a capital loss?
If you sell bitcoin for less than your ACB, the difference may be considered a capital loss that can generally be used to offset capital gains. Unused capital losses can generally be carried back 3 years or carried forward indefinitely.
For more details, see the CRA's Capital Gains Guide (T4037).
To calculate your capital gain correctly, you need to know your Adjusted Cost Base (ACB).
Adjusted Cost Base (ACB)
In Canada, bitcoin taxes are calculated using Adjusted Cost Base. This is important; it is quite different from how bitcoin taxes are calculated in the United States.
What is Adjusted Cost Base?
Your Adjusted Cost Base is the average price you paid for your bitcoin, including fees, converted to Canadian dollars. Every time you buy bitcoin, your average cost changes.
Why Adjusted Cost Base matters
When you sell bitcoin, you do not choose which bitcoin you sold. Instead, the CRA requires you to use your average cost (ACB) to calculate your capital gain or loss.
How ACB changes over time
Every time you buy bitcoin, your ACB changes. If you buy bitcoin at different prices over time, your average cost will move up or down. Your ACB is calculated cumulatively across every purchase you have ever made, not just within a single tax year.
You need to keep detailed records
The date of each transaction, the amount of bitcoin bought or sold, the value in CAD, fees paid, and the wallets/exchanges used.
Example: Calculating a bitcoin capital gain
Let's look at a simple example to see how a bitcoin capital gain is calculated in Canada.
Step 1: Buy bitcoin
| Date | Action | Amount | BTC Price | Total |
|---|---|---|---|---|
| Jan 1 | Buy | 0.1 BTC | $135,000 | $13,500 |
| Mar 15 | Buy | 0.1 BTC | $120,000 | $12,000 |
| Jun 20 | Buy | 0.1 BTC | $145,000 | $14,500 |
Total cost = $40,000
ACB = $40,000 ÷ 0.3 BTC
$133,333 CAD per BTC
Step 2: Sell bitcoin
| Date | Action | Amount | BTC Price | Total |
|---|---|---|---|---|
| Oct 5 | Sell | 0.1 BTC | $175,000 | $17,500 |
Step 3: Capital gain
Selling price = $17,500
$133,333 × 0.1 BTC sold = $13,333 ACB
Capital gain = $17,500 − $13,333
$4,167 CAD in capital gains
Step 4: Taxable capital gain
Taxable capital gain = $4,167 × 50%
$2,083 CAD in taxable capital gains
This $2,083 is added to your taxable income for the year.
If you bought bitcoin many times over the years, calculating your Adjusted Cost Base manually can become complicated. This calculation is cumulative across all purchases over all years — your ACB does not reset annually. Detailed transaction records and, when needed, help from a qualified tax professional make it easier to report gains and losses correctly.
How much tax do you pay on bitcoin in Canada?
This section applies specifically to bitcoin capital gains from selling or trading.
The amount of tax you pay depends on your total income and your province of residence. Capital gains are reported on Schedule 3 and subject to the 50% inclusion rate — only half of the capital gain is taxable and taxed at your marginal rate.
Step 1: Calculate your capital gain
Selling price minus Adjusted Cost Base.
Step 2: Apply the 50% inclusion rule
Only half of the capital gain is taxable.
Step 3: Add to your income
The taxable portion is added to your income for the year.
Step 4: Pay tax at your marginal rate
This depends on your income and province of residence.
Staking rewards, mining rewards, referral rewards, and similar crypto income may be taxed at 100% and reported on Form T2125 (business income) or Line 13000 (other income), depending on your situation. If you receive ongoing crypto rewards or staking income, consult a qualified tax professional — CRA treatment can be more complex than capital gains.
Because Canada uses a progressive tax system, the exact amount of tax you pay depends on your total income and province. The CRA publishes Canadian income tax rates for individuals by year. Accurate records and, when your situation is complex, advice from a qualified tax professional will give you the clearest picture of what you owe.
Record keeping for bitcoin taxes
The CRA requires you to keep detailed records of your bitcoin transactions, including books and records of crypto-assets for tax filing. These records are used to calculate your Adjusted Cost Base and capital gains or losses.
Records you need to calculate taxes
- Date of each transaction
- Amount of bitcoin bought or sold
- Value in Canadian dollars at the time
- Transaction fees
Records you should keep for CRA
- Wallet addresses and exchange accounts
- Transaction IDs and receipts
- Purpose of the transaction (buy, sell, transfer)
- Records must be kept for at least 6 years
Reporting bitcoin on your taxes
Bitcoin transactions must be reported on your tax return; the CRA explains reporting income from crypto-asset transactions. How you report them depends on whether your activity is considered capital gains or business income.
Capital gains (most investors)
Report on Schedule 3 — Capital Gains (or Losses)
- Applies to most investors
- Only 50% of the gain is taxable
- Capital losses can offset capital gains
Business income (less common)
Report on Form T2125 — Statement of Business or Professional Activities
- Frequent trading, mining, or earning bitcoin
- 100% of profits are taxable
- Business expenses may be deductible
Capital gains vs business income
In Canada, bitcoin can be taxed as either capital gains or business income.
| Capital gains (most people) | Business income (less common) |
|---|---|
| Buying and holding bitcoin | Day trading |
| Occasional selling | Frequent trading |
| Long-term investing | Mining or staking as a business |
| Personal investment | Running a crypto business |
| Only 50% taxable | 100% taxable |
How the CRA decides
The CRA looks at several factors when deciding whether bitcoin activity is capital gains or business income:
- Frequency of transactions
- Intention to make a profit
- Time bitcoin is held
- Knowledge of markets
- Business-like activity
- Mining or earning bitcoin as income
Mining and staking have their own reporting rules; see the CRA's guidance on reporting income from crypto-asset mining and staking activities.
The vast majority of Canadians who simply buy and hold bitcoin as an investment are taxed under capital gains.
Frequently asked questions
This guide is for educational purposes only. Bitcoin Well is not responsible for any tax liabilities, penalties, or interest charges resulting from your use of this information. The CRA has not reviewed or endorsed this content. We make no warranties about the accuracy, completeness, or reliability of the tax information provided. Always consult with a qualified CPA or tax attorney before making tax decisions.
This content does not constitute tax, legal, or financial advice. The information provided represents our understanding of current federal tax rules as they apply to bitcoin. Tax laws change frequently and vary by individual circumstances. Provincial and local taxes may apply differently. Your specific situation may require different treatment than described here.