Staking has become one of the most popular ways to earn passive income from cryptocurrency. By locking up tokens to help validate transactions on proof-of-stake blockchains like Ethereum, Cardano, or Solana, holders can earn regular rewards. But how does the Canada Revenue Agency (CRA) tax staking rewards? This guide covers the current Canadian rules and best practices for 2025.
Staking involves locking cryptocurrency in a proof-of-stake blockchain network to participate in transaction validation. In return, stakers receive rewards — additional tokens paid out by the network. Popular stakeable assets include Ethereum (ETH), Solana (SOL), Cardano (ADA), Polkadot (DOT), and many others.
Staking can be done directly through a blockchain wallet (native staking), through a centralized exchange like NDAX or Coinbase, or through liquid staking protocols like Lido.
The CRA has not issued a dedicated technical interpretation specifically on staking, but its broader guidance on crypto income is clear: when you receive something of value in exchange for an activity, that value is taxable income in the year it is received.
The CRA's position is that staking rewards are analogous to interest income or business income — not capital gains. This means:
The characterization of staking rewards as property income versus business income depends on the scale and nature of your activity:
If you stake modestly as a passive activity — locking up ETH on a staking pool and collecting rewards — the CRA is likely to treat the rewards as property income (similar to interest or dividends). This is reported on line 12100 of your T1 return.
If you operate staking as a business — running a validator node commercially, operating large amounts of capital, or treating it as a principal income activity — the CRA may treat all income as business income reported on T2125. Business treatment allows deduction of related expenses but makes 100% of net income taxable.
Staking typically creates two separate tax events:
Example: You stake 10 ETH and receive 0.1 ETH as staking rewards when ETH is worth $3,000 CAD. You report $300 as income in that tax year. Your ACB for those 0.1 ETH is $300. Later, you sell the 0.1 ETH for $500. Your capital gain is $200 ($500 − $300), and 50% ($100) is included in taxable income.
To report staking rewards accurately, you need the fair market value in CAD at the time each reward was received. This can be complex if you receive rewards frequently (daily or even hourly on some protocols).
Best practices:
When you stake through a centralized exchange, the exchange credits rewards to your account. These are typically recorded in your transaction history, making it easier to track the CAD value at receipt. Tax treatment is the same: income when received.
When you stake directly on-chain or through a DeFi protocol, you are responsible for tracking each reward transaction. Wallets like MetaMask do not automatically export tax-ready reports — you will need to connect your wallet address to tax software or manually track rewards.
Liquid staking protocols (like Lido's stETH) issue you a derivative token representing your staked position. The tax treatment of liquid staking is complex and debated. Receiving stETH for staked ETH may or may not constitute a disposition of ETH, depending on interpretation. The rewards that accrue via the rebasing mechanism of tokens like stETH are still likely taxable as income. Consult a tax professional for liquid staking positions.
You must keep records of every staking reward received, including:
Keep these records for at least six years from the end of the tax year.
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