Crypto Tax Rate in Canada
Updated: Aug 7
A crypto tax lawyer's guide to how cryptocurrency is actually taxed in Canada, why there is no single crypto tax rate, and what determines how much of your gain you keep.
If you have bought, sold, traded, or spent cryptocurrency, the real question is rarely just whether crypto is taxable. It is how much you will actually owe.
Even though many Canadians search for a “crypto tax rate," expecting a single percentage, there isn’t one. Canada does not tax cryptocurrency at its own rate. Instead, your crypto gains are added to your income and taxed at your regular marginal rates, and how much of the gain is taxable depends on whether it is a capital gain or business income. Below is a brief guide on the tax applied to crypto gains.
There is no separate crypto tax rate
The Canada Revenue Agency (the "CRA") treats cryptocurrency as a commodity, not as its own asset class with its own schedule of rates (see the CRA's "Information for crypto-asset users and tax professionals").
When you dispose of cryptocurrency at a profit, that profit is folded into your taxable income for the year and taxed at the same graduated rates as your salary, business income, or interest. So the real question is not "what is the crypto tax rate?" but rather "how much of my crypto gain is taxable, and what marginal rate applies to me?" A disposition, under subsection 248(1) of the Income Tax Act (the "Act"), includes selling crypto for dollars, trading one coin for another, and using crypto to pay for goods or services.
Your marginal rate is what actually applies
Canada's income tax is progressive. Federal rates for 2025 run from 14.5% on the lowest bracket up to 33% on income above roughly $253,000, and each province adds its own rates on top. Combined top marginal rates range from about 44% to 54% depending on the province. Your crypto gain is taxed at whatever marginal rate it falls into, and a large gain can be taxed partly at one rate and partly at a higher one as it stacks on top of your other income.
The 50% capital gains inclusion rate
If your crypto profit is a capital gain, only one-half of it is taxable. This is the capital gains inclusion rate, set at 50% under paragraph 38(a) of the Act. The taxable half is added to your income while the other half is not taxed at all.
For example, a $40,000 capital gain means $20,000 is added to your income. At a 45% marginal rate, you would owe about $9,000, an effective rate of roughly 22.5% on the full gain.
It’s important to note that the capital gains inclusion rate is still 50%. In 2024, the federal government proposed increasing the inclusion rate to two-thirds, but this proposal was later on March 21, 2025. Therefore, the inclusion rate remains 50%.
Business income is taxed in full
If the CRA characterizes your crypto activity as a business, for example frequent day-trading, or mining or staking on a commercial scale, then 100% of your profit is taxable, not 50%. There is no inclusion-rate discount on business income. The CRA’s definition of "business" is when the activity reaches "an adventure or concern in the nature of trade." The CRA weighs all of the following factors to make this determination: the frequency and volume of trading, the time and effort involved, financing, and intention to profit.
Business income is taxed at your full marginal rate, though you can generally deduct related expenses and apply business losses against other income.
The line between investor and trader is fact-specific, and the CRA can recharacterize what you reported. Because business income effectively doubles the taxable portion of a gain, getting this classification right is often the single biggest lever on your effective rate. If the CRA challenges how you reported a gain, our Cryptocurrency Tax Audit service can help.
Mining, staking, and other crypto income
As opposed to gains made from buying and selling crypto, which can be either capital gains or business income, crypto earned from mining, staking rewards, airdrops, or as payment for goods or services is generally classified as business income when received, valued in Canadian dollars at its fair market value on that date.
A later disposition of that crypto can then trigger a separate capital gain or loss, or receipt of business income. In each case the rate that applies is, again, your marginal rate, and the inclusion will depend on whether you’re seen to be carrying on “adventure or concern in the nature of trade.” Notably, mining or staking carried on commercially will likely cause the later sales of the crypto to be treated as business income.
What actually determines your effective rate
Put together, your effective crypto tax rate depends on three things: whether the gain is capital or business, how large it is and which marginal brackets it lands in, and your province of residence. Two people with the same $50,000 gain can pay very different amounts of tax. Ultimately, you can still reduce your tax burden through diligent planning, timing dispositions, harvesting losses within the rules, and correctly classifying activity.
How the gain is calculated
Your gain is your proceeds minus your adjusted cost base (ACB) minus any outlays. The ACB is generally what you paid to acquire the crypto, including fees, measured in Canadian dollars at the time. Because Canadians often buy the same coin at many different prices, the ACB is a weighted average across all units of that coin and is recalculated with each purchase. Every transaction must be valued in Canadian dollars at its fair market value on the date it happened.
How and where you report it
Capital gains are reported on Schedule 3 of your T1 return. Business income is reported on Form T2125. If you are carrying on a crypto business or are paid in crypto for goods and services GST/HST can also apply, which carries its own set of reporting and filing requirements.
Ensure to keep thorough records of dates, values in Canadian dollars, wallet addresses, exchange statements, and the purpose of each transaction. Crypto tax software can help reconcile activity across wallets and exchanges, but the legal responsibility to report correctly is yours.
What happens if you get it wrong
The CRA has become far more active on with crypto auditing. The CRA has multiple tools to accomplish this. It uses blockchain-analytics tools and, when necessary, has used the Federal Court to compel Canadian exchanges to hand over customer records.
Furthermore, Canada has committed to the OECD's Crypto-Asset Reporting Framework (CARF), with international information-sharing expected around 2027. This means that even transactions done on foreign exchanges could be shared with the CRA, if the foreign jurisdiction has signed the OECD’s agreement. For more on this topic, refer to the linked article for a breakdown of the incoming CARF regime.
If you have unreported crypto from prior years, the risk of an audit and its consequences grows over time. Unreported income can attract gross negligence penalties of up to 50% of the tax owing under subsection 163(2) of the Act, and, in serious cases, prosecution for tax evasion under section 239.
If you have unreported crypto from prior years, the Voluntary Disclosures Program may let you correct your filings and reduce or eliminate penalties, but generally only if you come forward before the CRA contacts you.
How we can help
Solstice Law helps Canadian crypto holders understand and plan for their actual tax exposure, classify activity correctly, and respond if the CRA challenges how a gain was reported.
This article is general information, not legal or tax advice. Your situation is unique, so please contact us to discuss the specifics.
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