Do you know your Bitcoin tax rate from your ETH tax rate? The Canada Revenue Agency taxes all crypto as either income or a capital gain - and they’re sending a clear message that crypto investors need to calculate their crypto taxes correctly and pay their dues. Learn about Canadian crypto tax rates for 2022 and how to calculate yours.
Know what your Bitcoin tax rate is? How about other cryptocurrency tax rates for popular coins like ADA, ETH or BNB?
It’s important you do. The Canada Revenue Agency (CRA) has stated they’re working with large crypto exchanges based in Canada like Coinsquare to share customer information and ensure crypto investors are paying their fair share in crypto taxes.
The best way to avoid an unwelcome audit from the CRA is to understand your crypto tax rate, calculate your crypto taxes accurately and report this to the CRA.
But crypto tax rates aren’t as simple as Canadian investors might like. This is because crypto doesn’t have an exclusive tax rate. Instead, it’s subject to Federal Income Tax - as well as Provincial Tax - at either your full tax rate or half your tax rate, depending on how the CRA views your crypto investments.
Because of this, your crypto tax rate depends on a variety of factors. We’ll be breaking it down for you in this guide.
Canada Crypto Tax Rates 2021 - 2022
Like many other tax offices, The Canada Revenue Agency doesn’t view cryptocurrency as a currency. Instead, it views it as a commodity - similar to a property or an asset.
When it comes to crypto taxes, Canada hasn’t quite followed the same pattern as many other countries and it’s guidance is vague to say the least. The way you’ll be taxed depends on whether the CRA sees your cryptocurrency investments as business income or a capital gain.
If it’s seen as business income, you’ll be taxed on 100% of your income or profits at the same Federal and Provincial Tax Rate you are on other income.
If your crypto investments are seen as capital gains, you’ll only pay tax on 50% of your total gains.
Canada Tax Deadlines 2022 - 2023
The tax year in Canada runs from the 1st of January 2022 to the 31st of December 2022. There are some important dates you need to know about:
1st January 2022: 2022 tax year starts.
30th April 2022: Deadline for tax returns for the previous year (2021).
15th June 2022: For self-employed taxpayers, this is your deadline to submit 2021 tax returns. However, the balance due must still be paid by the 30th of April 2022.
31st December 2022: 2022 tax year ends.
1st January 2023: 2023 tax year starts.
30th April 2023: Deadline for 2022 tax returns.
31st December 2023: 2023 tax year ends.
How and when is crypto taxed as income in Canada?
The CRA’s guidance on what is considered business activity isn’t too specific. They say the following points are commons signs that you may be conducting business activities:
- You conduct crypto activity for commercial reasons.
- You promote a product or service.
- You show that you intend to make a profit.
- Your crypto activities are regular or repetitive.
Their own example of crypto business activity is a crypto investor who is actively and regularly trading in cryptocurrency and intends to profit from their activities, like a day trader. With this understanding, many Canadian crypto investors are likely to be viewed as conducting business activities.
The CRA determines whether investors are carrying on business activities on a case by case basis. All crypto investors can do is file their taxes accurately and let the CRA decide whether they view it as a business activity or a capital gain.
All this to say, many crypto transactions can be viewed as income in Canada. This includes:
- Getting paid in crypto
- Mining - unless it's at a hobby level.
- DeFi interest.
- Receiving crypto dividends.
- Referral bonuses.
- Profits from selling crypto for fiat currency.
- Profits from exchanging crypto for crypto.
- Selling an NFT you created.
- Play-to-earn rewards.
- Receiving a share of DAO profits.
If you’re earning crypto income, you’ll pay the same rate of tax on it as you do your other income. Both your Federal and Provincial Income Tax rates will apply.
Canada Income Tax Allowance
All Canadian taxpayers get a personal tax allowance, also known as the basic personal amount (BPA). This is a non-refundable tax credit of $13,808.
Anyone who is employed and is liable to pay both Federal and Provincial Tax can claim the BPA and pay no tax on $13,808 of their earnings.
The CRA has confirmed this increases to $14,398 for 2022 2022 and $15,000 in 2023.
Canada Income Tax Rate
In Canada, you’ll pay a Federal Tax Rate, as well as a Provincial Tax Rate. You can see the Federal Tax Rate for 2021 and 2022 below.
Federal Income Tax Rate
The Provincial Income Tax Rates follow the same structure as the Federal Tax Rate. Canada uses a gradual income tax system, so you won’t pay the same rate on all your taxable income. Instead, you’ll pay a different percentage on each ‘chunk’ of your earnings, as you move up the Federal Income Tax rate bands. Here's the Income Tax rate for each Province:
Newfoundland and Labrador Provincial Tax Rate
Prince Edward Island Provincial Tax Rate
Nova Scotia Provincial Tax Rate
New Brunswick Provincial Tax Rate
Ontario Provincial Tax Rate
Manitoba Provincial Tax Rate
Saskatchewan Provincial Tax Rate
Alberta Provincial Tax Rate
British Columbia (B.C.) Provincial Tax Rate
Yukon Provincial Tax Rate
Northwest Territories Provincial Tax Rate
Nunavut Provincial Tax Rate
Quebec Provincial Tax Rate
How to work out how much you owe in crypto income tax
- Figure out your regular taxable income, for example from your employment.
- Identify the highest Federal and Provincial Income Tax rate band you’re in.
- Figure out your total income from crypto investments. Add this to your regular taxable income. If you’re still in the same Federal and Provincial Tax rate band, this will be your crypto tax rate for any crypto income. If you’ve moved to a higher band due to it, use this tax rate instead.
You live in Vancouver, British Columbia.
You earn $60,000 in taxable income from your job - you’ve already deducted your personal allowance. You also earn $20,000 in crypto income.
This puts you in the 20.5% Federal Tax Rate band for your crypto earnings.
Your Provincial Tax Rate band is 7.7%.
20.5% + 7.7% = 28.2%. This is your crypto tax rate.
28.2% of $20,000 is $5640. This is what you’ll pay in taxes.
How and when is crypto taxed as a capital gain in Canada
Because cryptocurrency is viewed as a commodity, when you dispose of it by swapping, selling or spending it, this is seen as a disposition of an asset - which makes it subject to Capital Gains Tax. Dispositions in Canada include:
- Profits from selling crypto for fiat currency.
- Profits from swapping crypto with crypto.
- Using cryptocurrency to purchase goods and services.
- Gifting crypto
Your whole asset won’t be subject to Capital Gains Tax, only any profits from disposing of it.
Canada Capital Gains Tax Allowance
Canada taxes short and long-term gains at the same rate. However, you’ll only pay Capital Gains Tax on 50% of your gains!
This rule works both ways though, so it applies to your losses too. You can only offset half your losses against half your capital gains when calculating your net capital gains.
Canada tax rate on crypto gains
Canada doesn’t have a specific Capital Gains Tax. Instead, your crypto tax rate on your gains will be the same as your Federal and Provincial Income Tax rates. Remember, you’ll only pay it on half your gains.
How to work out how much you owe in Capital Gains Tax
- Identify which of your crypto transactions are subject to capital gains tax and your overall profits and losses as a result of them.
- Calculate the fair market value (FMV) of your capital gains and losses in CAD.
- Work out your net capital gains by subtracting your net capital loss. Remember, you can only offset half your capital losses - so your net capital loss will be half of your overall losses.
- Identify which Federal and Provincial Income Rate you pay. You’ll be paying the rate of the highest band you’re in on your capital gains.
You live in Vancouver, British Columbia.
You earn $60,000 in taxable income after you deduct your personal allowance. You made a capital gain of $15,000 and a capital loss of $2,000.
You take 50% of your capital gain ($7,500) and deduct 50% of your capital loss ($1,000) leaving a net capital gain of $6,500.
Your Federal Tax Rate is 20.5%. Your Provincial Rate Rate is 7.7%.
20.5% + 7.7% = 28.2%. This is your crypto tax rate for capital gains.
28.2% of $6,500 =$1,833. This is how much you'll pay in tax.
Are any crypto transactions exempt from tax in Canada?
Yes, there are some crypto transactions that you’ll pay no Income Tax or Capital Gains Tax on at all in Canada. These include:
- Buying crypto with fiat currency.
- HODLing crypto.
- Being gifted crypto.
- Transferring crypto between your own wallets.
- Creating a DAO (Decentralized autonomous organization).
When to file taxes in Canada
The tax deadline in Canada is the 30th of April 2023. You'll need to report your gains and income from crypto from the 2022 financial year by this date.
How to file Canadian crypto taxes with Koinly
Before you get to filing your taxes, you need to calculate your crypto taxes.
This means identifying which of your transactions are subject to Income Tax and which are subject to Capital Gains Tax. It also means going through each transaction to identify the FMV on the date you purchased and disposed of the asset. For crypto investors who are trading multiple assets regularly, this all starts to become a lot of hard work.
Crypto tax software like Koinly can help make this step simple. It calculates your crypto taxes for you and puts it into easy-to-read tax reports, so all you need to do is submit your taxes to the Canada Revenue Agency.
For crypto capital gains, you need to report these using a Schedule 3 Form.
For crypto income, these should be included in your Income Tax Return T1.
You can file both of these online using CRA's My Account.
You can find more helpful crypto tax advice in our Canada Crypto Tax Guide.