With the rise of crypto currencies such as Bitcoin (BTC), Ethereum(ETH), Binance Coin (BNB), Solana (SOL), Cardano (ADA). This question has been pondering in the minds of crypto traders, day-traders, investors alike. There may be different opinions on the internet about the taxation of these currencies.

Unfortunately, Canadian taxation works on principle of self-assessment. Meaning tax payers are responsible to file their taxes correctly. So, despite many tax payers doing their own tax returns while not properly reporting their trading activity may get penalized by CRA despite their good intentions & payment of taxes.

As a rule of thumb, Canadians are required to pay tax on their world-wide income & gains on assets, and Crypto assets are no different. With the evolution of Fintrac (Financial transactions and reports analysis center) in Canada. And CRA’s increasing regulations on crypto currency platforms and brokers to provide details of customers and transactions. It is quite possible that the government already has the data of your crypto trading operations. So, it becomes very important to file your taxes correctly and as per the rule of law. Failure to report the crypto gains, income could result in audits with hefty negligence penalties (it could even be up to 50% of taxes owed) plus interest and a long stressful battle with CRA.

It is a common misconception that crypto investment swapping, gifting, does not result in tax as the taxpayer has not actually realized any gains. However, this is not true. There are different type of tax implications that may apply in these cases such as capital gains tax, business income tax, taxes on attribution of gains to non-arm’s length parties (spouse, child, grandchild, parents etc.)

Hence, it is strongly advised to contact a tax specialist if you are involved in crypto currency trading & investments to make sure your taxes are filed properly. Our office has experienced chartered professional accountant (CPA) who has extensive knowledge of crypto currency taxes, day-trading, options trading taxation. Please contact the office to book your consultation.