Canada Cryptocurrency Tax Guide & The CRA Processes for Crypto Taxes

Canada Cryptocurrency Tax Guide
Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Reading Time: 4 minutes

With each new year, cryptocurrencies enter a new era as well. In 2008, Satoshi set its foundation. Moving on, investors step in to gain huge profits. Moreover, we have been receiving other news about cryptocurrencies replacing fiat currencies.

You can ignore the facts mentioned above for a while, but we have something that probably should not be overlooked – your cryptocurrencies are taxable.

Yes, you heard it right! All your crypto-profits, crypto-assets, and crypto-tradings are taxable under Canadian taxation laws.

This article has discussed a broad overview of Canadian cryptocurrency taxes and different processes to avoid unnecessary monetary or criminal penalties.

How Does the Canadian Revenue Agency (CRA) Understand Cryptocurrency?

Even if the futuristic trends about Cryptocurrency appear confusing, the CRA looks pretty sure about policies regarding cryptocurrency taxes.

The CRA treats your Cryptocurrency as equivalent to a physical commodity. They understand your crypto as an oil or gold for taxation processes. If you make some profits on your Cryptocurrency during a specific tenure, the CRA will treat this as a capital gain.

Imagine in 2020 that you had a bitcoin with a market value of about $30,000. Moving on, in 2021, its value increased from $30,000 to $40,000. The $10,000 will act as a capital gain. Moreover, the CRA will take this capital gain under different taxation processes.

Is My Cryptocurrency Trackable by the CRA?

The CRA has lately been working on tracking the data for your cryptocurrency assets. Yes, they can track your virtual currencies. Moreover, all the exchanges come under tight laws to operate in any country. They may share data for your crypto holdings to make the taxation process smooth.

The CRA reported being closely connected and talking with different exchanges in recent months. The CRA wants these exchanges to provide the data for the people holding crypto assets and wants to make sure that nobody evades the tax.

You can read these developments to get a broad overview of how CRA can track crypto assets.

  • Every money service in Canada reports to the CRA if a transaction exceeds $10,000.
  • The earlier details imply that if you made any transaction above $10,000, it would notify the CRA.
  • The CRA works with FINTRAC, an institution that regulates taxation processes and ensures nobody evades tax. Furthermore, some of the exchanges are listed with FINTRAC.
  • Exchanges registered with FINTRAC come under heavy scrutiny. They may trace your transactions by collecting your ID and addresses.

It’s also important to note that even if there are some limitations for the CRA to audit your crypto transaction, it does not imply that there will be no mechanism to maintain check and balance on crypto transactions in the future.

We need to be super cautious about these regulations since it involves your money.

Different Conditions to Consider Cryptocurrency for Taxes

Taxation is a very complex process. It depends upon your contextual financial data and reporting. Moreover, the laws may be subject to change every year. You cannot estimate and calculate your taxes using standard metrics.

We recommend consulting a cryptocurrency CPA to know about your financial details and taxes.

However, we have listed broad categories to consider your Cryptocurrency under taxation processes.

1 – Cryptocurrency As a Business Income

As mentioned before, the CRA treats your Cryptocurrency as a commodity. Categorizing it as a commodity may be subject to income and capital gain taxes.

If you receive Cryptocurrency in your earnings, it may be your income. Under this condition, the CRA will process your Cryptocurrency with income tax.

conditions for crypto income in the Canada cryptocurrency tax

Following are some of the broad rules to understand your crypto as an income.

  • You make regular crypto transactions and operate on a repetitive basis.
  • You come to make a profit.
  • Your cryptocurrency activities happened for different commercial reasons.
  • The crypto you receive after mining.
  • You are paid in crypto salary.
  • You are receiving crypto in Airdrop.
  • You are staking crypto.

2 – Capital Gain Taxes in Cryptocurrency

All the profits you make by selling your Cryptocurrency are counted under capital gains. The capital gains are not only limited to selling; they may include other transactions such as gifting, spending, and swapping.

Following are some of the conditions that may include under the Canadian cryptocurrency capital gain tax:

  • Selling your cryptocurrencies for fiat (CAD in the case of Canada)
  • Buying one crypto (for example, Bitcoin) by exchanging another (For example, Ethereum).
  • Using Cryptocurrency to spend on different goods.
  • Using crypto to gift.

3 – Variables Involved in the Canadian Cryptocurrency Taxes

Other than considering Cryptocurrency as a business income and for capital gains purposes, other variables can also affect your taxes.

  • Crypto assets possession period.
  • Your knowledge regarding cryptocurrencies.
  • Your crypto-assets and their connection with your business.
  • The average time you spend engaging yourself in cryptocurrencies.

Keeping Records of Your Cryptocurrency Transactions For Taxes

If you deal with cryptocurrency transactions daily, keeping a record of your daily transactions will be hard.

We’d recommend using software to maintain your crypto transactions daily. However, it is also important to note different metrics that the CRA thinks are important while dealing with crypto transactions.

Some of the general rules by the CRA are mentioned here:

  • Transaction date.
  • All receipts for the transactions (purchase/transfer).
  • Transaction value in the Canadian dollars.
  • Your cryptocurrency wallet address.
  • Mining costs.
  • The legal procedures while calculating all these costs.

Please note that some broad categories are involved while calculating your cryptocurrency taxes. These variables may extend further as well, considering your contextual details.

Tax Evasion Penalties

The CRA mentions that in 2017, they almost caught 408 individuals who evaded taxes. The monetary fine involved was about $44 million and 3103 months behind the jail.  

Since taxes involved in Cryptocurrency are highly complex to understand, we’d recommend consulting a professional CPA to avoid any penalty.

We Can File Your Cryptocurrency Taxes

At AkifCPA, we have maintained years of professionalism while filing taxes. We have been through some tough processes to understand the challenges and legalities of taxation.

If you need any help calculating your crypto taxes, we are here to help. Contact us today; we are just a click away.

Subscribe to Our Newsletters

Crypto Tax & Accounting Newsletter

*Email

Cross-Border Tax Newsletter

*Email
Sign up for our Newsletter
*Email
Over 100 5 Star Reviews!
AKIF CPA
5.0
Based on 107 reviews
powered by Google
Annie Phillips
Annie Phillips
12:35 10 Oct 21
Turn around time was amazing on the project I needed done. When you don’t understand all the different forms... communication is key and you will get that here. They are there to explain what and why you need it.read more
Meru Kapadia
Meru Kapadia
23:33 01 Oct 21
I usually don't write reviews much as everyone has different experiences, but definitely wanted to share the positive... experience I have had here and why I would recommend them to all my family, friends and co-workers.I got a referral for here from a friend, so thought of giving them a try over my old CPA firm. I have been going here for a couple years now and have to say they are top notch. They are always responsive and willing to work with me even when I am delayed. I generally like to ask a lot of questions and not once did I feel like they were annoyed by it and would very thoroughly and positively answer all my concerns with detail explanations. Even during the pandemic, they worked with me 100% virtual and it was seamless. Overall, I am very happy with this firm and will continue with them for the foreseeable future.read more
Kevan Shah
Kevan Shah
21:45 01 Oct 21
I’ve been going to them for 3 years now for multiple of my businesses. I changed to them after I had problems with my... previous CPA firm and I’m so glad I did! Best decision I ever made for my businesses. They have saved me thousands of dollars over the years as well as deal with my immensely complicated tax filling issues. No matter when I call, they always help answer all my questions (and trust me I have a lot) and put my mind at ease on all my concerns. I feel as if I am family the way they take care of me. The quality of their work has not changed; very consistent and professional. It is an understatement when I say I highly recommend them.read more
Maunil Shah
Maunil Shah
16:19 01 Oct 21
AKIF CPA is the best place for your tax needs! Saim has been easily available for my all my questions and concerns. ... Couldn’t ask for a better firm that provides excellent service and a familiarity with their clients. I always recommend family and friends to AKIF CPA!!read more
Shah Hussain
Shah Hussain
03:58 01 Oct 21
Hello AKIF CPA,I wanted to share my experience with you, your team and whomever may be reading this message. My most... humble thanks to you and your team for a being such great part of my success.You have done a fabulous job for us this year, and since you took over our books (during our most devastating times) you have literally taken weight off of our shoulders.Thanks for bringing everything up to date and also providing us with numbers or as you call it consultations, ahead of time so we could seal the holes.Great work!!!Shah H.read more
Sumit Dalwadi
Sumit Dalwadi
04:57 30 Sep 21
The professionals at Akif have been absolutely amazing! Quick to answer all the questions I had and always available... to offer their guidance.read more
Calvin R
Calvin R
20:21 29 Sep 21
I recommend these guys! I will be going back next year. They made everything simple and we understood what was... happening. There we issues with our taxes due to our previous accountant and these guys fixed everything. They answered our questions and service was always with a smile.read more
Ammoria Daniels
Ammoria Daniels
02:11 16 Sep 21
We contacted Akif with an urgent matter regarding corporate taxes. Akif immediately understood what was needed and... within days had everything ready to sign. The level of service we received was amazing and unmatched. Waqar expertise in trucking industry made our situation seamless. His communication was outstanding; I heard from him daily and could have been completed sooner if I was as fast as he was 😃 Highly recommended!read more
Joe Paneitz
Joe Paneitz
18:30 18 Aug 21
What an absolute pleasure to work with this CPA firm. My business is already seeing such a positive impact and growth.... I cannot believe I didn't connect with them sooner. This firm is helping in so many ways! 5 stars is an understatement! Thank you so much for your help AKIF CPAread more
Helptest ARCpoint Labs
Helptest ARCpoint Labs
15:02 18 Aug 21
The firm is quick, responsive, and has the latest technological software. Thus far, I have been with them for 3+ years... and will continue to work with them even after relocating. They make it easy even when I'm miles away. Would highly recommend them.read more
Luz Tipaz
Luz Tipaz
16:06 13 Jul 21
Saim and his team are the best CPAs in town. I have been their client for years. All started when I needed help with... company structure with multiple companies and then accounting and Taxes. I have been very happy ever since. Thank you AKIF CPA.read more
Maria perez
Maria perez
18:31 08 Jun 21
Me and my husband have been getting all of our personal Taxes, business Taxes, monthly bookkeeping, accounting and... payroll done with AKIF CPA. Recently, we had more stuff come up and had detailed analysis done on capital gains, single family rentals (SFR) and business disposition. You will only know how great this CPA company is until you have worked with them and given them a chance. Words can’t describe our experience. AKIF CPA gets the job done every time - very reliable, professional and affordable.read more
Afnaan Amin
Afnaan Amin
22:14 02 Jun 21
Very good experience, we had unique situation in regards to cross border income as Canadians currently residing in the... US. Income on both sides of the border through completely different channels. Everything was very easy and completed timely, I also had lots of random questions and Mohammad provided top notch service along the way and even after we finished our taxes!! Highly recommended.read more
Ryan Paton
Ryan Paton
10:56 08 May 21
I moved to the USA from Canada late 2018 as part of a promotion/relocation for work. For my 2019 returns, I used an... accounting firm recommended by the local Canadian social club in my city, which was a terrible experience. They were slow to respond to inquiries and would follow up in piecemeal requests which dragged out my return process over several months, often asking for information I had already provided.For the price I paid, I vowed to find better service. I found Mohammad online and decided to reach out. Mohammad was extremely responsive, took care of my US and Canadian returns as well as my wife's business returns in a timely manner. Overall, it was a very positive experience and I would recommend him to another in my situation.read more
Tuan Vo
Tuan Vo
01:59 20 Apr 21
I relocated to Texas from Alberta, Canada and needed a CPA to help me with my cross-border taxes as I was not happy... with the CPA that I used previously. During my interviewing process to find another CPA, I had good feedback from Mohammad as he was able to answer my questions regarding my unique tax situation with expertise, and importantly to me, in a timely manner. I decided to use his services for the current tax year and I have nothing but compliments for the work Mohammad provided. If you are in need of a professional cross-border CPA, I highly recommend reaching out to Mohammad Akif.read more
See All Reviews
js_loader