Bitcoin is the most widely held cryptocurrency in Canada, and also one of the most misunderstood from a tax perspective. Whether you bought a small amount out of curiosity or have been accumulating Bitcoin for years, the CRA expects you to report your gains and losses. Here is a complete guide to how Bitcoin is taxed in Canada in 2025.
No. Under the Currency Act, only Bank of Canada notes and coins issued by the Royal Canadian Mint are legal tender. Bitcoin and all other cryptocurrencies are not legal tender. Merchants in Canada are not required to accept Bitcoin as payment, and it does not carry the same legal status as CAD.
This classification matters because it means all Bitcoin transactions have potential tax consequences. The CRA does not treat your Bitcoin wallet like a bank account — it treats it like an investment account.
Most Canadians who hold Bitcoin as a long-term investment are taxed on capital gains. Under Canadian tax law, only 50% of your net capital gains are included in your taxable income. This is known as the capital gains inclusion rate.
Example: You purchased 0.5 BTC for $15,000 CAD. You later sold it for $35,000 CAD. Your capital gain is $20,000. Only $100 (50%) is added to your taxable income. At a 40% marginal rate, you would pay $4,000 in tax — an effective rate of 20% on your Bitcoin profit.
If the CRA determines you are trading Bitcoin as a business — such as day trading, running a crypto arbitrage operation, or earning Bitcoin through regular commercial activity — 100% of your net profits are taxable as business income. You cannot elect for capital gains treatment if your activity has the hallmarks of a business.
However, business traders can deduct legitimate expenses: trading fees, software subscriptions, a portion of home office costs, and professional services.
You must report any of the following as a taxable disposition of Bitcoin:
Simply moving Bitcoin between your own wallets or exchanges is not a taxable event — but you must keep records to prove the coins belong to you throughout.
The CRA requires the Adjusted Cost Base method to track your Bitcoin cost over time. Every time you buy more Bitcoin, you recalculate your average cost per coin.
Step-by-step example:
This calculation must be done for every cryptocurrency separately. Your BTC ACB and ETH ACB are tracked independently.
Capital gains from Bitcoin are reported on Schedule 3 of your T1 General return. You list:
Business income from Bitcoin trading goes on Form T2125 (Statement of Business Activities).
If you hold Bitcoin or other cryptocurrencies on foreign exchanges (U.S.-based platforms like Coinbase, Kraken, or Binance) and the total cost of those holdings exceeds $100,000 CAD at any time during the year, you must file Form T1135 — the Foreign Income Verification Statement.
This is a reporting requirement separate from your income tax return. Failing to file can result in penalties of $25/day up to $2,500, plus additional penalties for gross negligence.
If you receive Bitcoin as payment for work, services, or employment, its fair market value in CAD at the time of receipt is fully taxable as income — not as a capital gain. You then hold the Bitcoin at that fair market value as your ACB going forward.
For example, if you are a freelancer paid 0.1 BTC when Bitcoin is worth $45,000 CAD, you report $4,500 as income. Later, if you sell that 0.1 BTC for $6,000, your capital gain is $1,500 (not $6,000).
Capital losses from Bitcoin can offset capital gains from Bitcoin or any other capital property. Net capital losses can be:
To apply a loss to a prior year, complete Form T1A (Request for Loss Carryback).
The CRA has significantly increased its crypto enforcement efforts. In 2021, the CRA issued requirements to major Canadian exchanges to hand over customer transaction data. The agency also uses blockchain analytics firms to trace transactions on public blockchains like Bitcoin's.
The CRA has stated it views cryptocurrency non-compliance as a top audit priority. Canadians who have not reported crypto gains in prior years are encouraged to use the Voluntary Disclosures Program before the CRA contacts them.
Keep records of every Bitcoin transaction for a minimum of six years from the end of the tax year in which the transaction occurred. Good records include:
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