Cryptocurrency and Taxes – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Cryptocurrency has become one of the fastest-growing investment categories among Canadians, but the Canada Revenue Agency (CRA) is equally fast in expanding its enforcement efforts. Whether you trade Bitcoin, Ethereum, Solana, DeFi tokens, stablecoins, or NFTs, CRA considers crypto transactions fully taxable and expects meticulous record-keeping. Many Canadians wrongly assume crypto is anonymous or untaxed, but CRA receives data from exchanges, blockchain analytics tools, and international reporting agreements. This guide explains exactly how cryptocurrency is taxed in Canada—and how to avoid penalties.

Legal and Regulatory Framework

CRA treats cryptocurrency as a commodity, not currency. Crypto taxation is governed by the Income Tax Act, CRA guidance on digital assets, and GST/HST rules for certain crypto transactions. Crypto transactions can be taxed as capital gains (for investors) or business income (for frequent traders, miners, stakers, or those operating commercially). All crypto dispositions—sales, swaps, conversions, payments, transfers between coins—are taxable events. Canadians must report crypto holdings on the T1135 Foreign Asset Form if held on certain foreign exchanges.

Key Court Decisions

In Douglas v. Canada, the court upheld penalties against a taxpayer who failed to report crypto transactions held on overseas exchanges. In Zhang v. Canada, CRA’s position that crypto-to-crypto swaps trigger dispositions was confirmed. In Thompson v. Canada, the court reinforced that taxpayers must maintain records for all digital transactions, regardless of platform anonymity. These decisions show CRA’s aggressive stance and the legal expectation of complete transparency.

How Cryptocurrency Is Taxed

Crypto gains may be taxed in one of two ways:
Capital Gains (most investors): 50% of the gain is taxable.
Business Income (frequent traders, professional miners): 100% of profit is taxable.
CRA evaluates intention, volume, frequency, and commercial characteristics to determine which category applies.
A taxable disposition occurs whenever you: sell crypto for cash, swap one coin for another, purchase goods/services using crypto, gift crypto, or transfer between wallets in a way that changes beneficial ownership.

Airdrops, Mining, and Staking

Income from mining, staking, yield farming, and airdrops is taxable as business income at the time the coins are received, based on fair market value. When those coins are later sold, capital gains (or losses) apply based on the value at receipt versus value at sale.

NFTs and Digital Collectibles

NFT creators are typically taxed on business income when selling minted NFTs. Investors trading NFTs are taxed on capital gains or business income depending on activity. NFTs held or traded on foreign platforms may trigger T1135 reporting requirements.

Record-Keeping Requirements

CRA requires detailed books and records for every crypto transaction, including: dates, cost basis, fair market values, wallet addresses, transaction IDs, exchange records, gas fees, and conversion rates. Failure to maintain records may result in reassessment or penalties. Blockchain data alone is not sufficient without proper documentation.

Crypto Held on Foreign Exchanges – T1135 Rules

Crypto held on foreign exchanges may qualify as “specified foreign property” if the exchange holds custody of assets. If your foreign-held crypto exceeds $100,000 CAD in cost at any time, you must file T1135. Self-custody wallets currently do not trigger T1135 obligations, but CRA may update rules in the future.

GST/HST and Crypto

Crypto used to purchase goods or services is treated as a barter transaction, meaning GST/HST may apply based on the fair market value of the crypto at the time of the transaction. Crypto mining may be considered a taxable supply for GST/HST purposes if done commercially.

Common CRA Audit Triggers

CRA audits crypto users for: large unexplained deposits, high-volume trading, foreign exchange accounts, missing T1135 filings, crypto-to-crypto swaps not reported, income mismatches from mining/staking, NFT activity, or involvement in offshore exchanges. CRA uses blockchain forensics to trace wallets, addresses, and transaction flows.

Mackisen Strategy

At Mackisen CPA Montreal, we help crypto investors and traders stay compliant while minimizing tax. We calculate adjusted cost bases, classify business vs capital gains properly, prepare T1135 forms, reconcile exchange data, prepare crypto-specific bookkeeping, optimize gains and losses, and defend clients during CRA crypto audits. Our crypto-tax expertise ensures complete transparency and accurate reporting.

Real Client Experience

A Montreal investor with over 3,000 crypto transactions avoided penalties after we prepared complete cost-basis records. A mining operator facing CRA reassessment corrected income classification and reduced tax exposure. A DeFi trader with missing records avoided audit penalties after we reconstructed blockchain history. An NFT creator saved tax by structuring income and expenses correctly under business rules.

Common Questions

Is crypto anonymous? No—CRA uses exchange data and blockchain analytics. Are crypto-to-crypto trades taxable? Yes—each swap triggers a disposition. Do I have to report losses? Yes—losses must be reported to claim them. Is mining taxable? Yes—at the moment coins are earned.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal provides expert guidance to crypto investors, miners, stakers, and NFT creators. We ensure accurate reporting, minimize tax, and protect clients during CRA audits—while helping build long-term crypto-tax strategies.