Crypto Tax Canada 2026: How to Report Bitcoin and Ethereum to the CRA

The CRA treats cryptocurrency as a commodity, not a currency. Every time you sell, trade, or spend crypto, that’s a taxable event. Buying and holding is fine — no tax there. But the moment you dispose of it, you owe.

Most Canadians who hold crypto as an investment will pay capital gains tax at a 50% inclusion rate. Some will owe tax on 100% of their profits as business income. The difference between those two outcomes can double your tax bill, so getting the classification right matters.

What Counts as a Taxable Event

Not everything you do with crypto triggers tax. Here’s the breakdown:

Taxable:

Selling crypto for Canadian or US dollars (or any fiat currency)
Trading one cryptocurrency for another (swapping ETH for SOL is a disposition of ETH)
Using crypto to buy goods or services (that coffee you bought with Bitcoin was a taxable event)
Receiving crypto as payment for work or services you provided

Not taxable:

Buying crypto with Canadian dollars
Transferring crypto between your own wallets (moving BTC from Coinbase to a hardware wallet)
Simply holding crypto — unrealized gains aren’t taxed

That second point trips people up. Swapping BTC for ETH feels like you’re just shuffling things around, but the CRA sees it as selling BTC at its fair market value and buying ETH. You need to calculate the gain or loss on the BTC at the time of the swap.

Capital Gains vs Business Income

This is the single most consequential question for crypto holders. The CRA doesn’t have a bright-line test. They look at your overall behaviour.

Capital gains treatment (50% taxable) applies if you:

Buy and hold as a long-term investment
Trade infrequently
Don’t have specialized knowledge or training in trading
Don’t spend significant time managing your portfolio

Business income treatment (100% taxable) applies if you:

Trade frequently — daily or weekly
Hold positions for short periods
Have specialized knowledge of crypto markets
Spend significant time analyzing and executing trades
Use borrowed money to finance your trading

The CRA considers frequency of transactions, holding periods, knowledge of markets, time devoted to trading, financing used, and your stated intention at the time of purchase. There’s no magic number of trades that flips you from investor to business. It’s a holistic assessment.

Most people who bought some Bitcoin or Ethereum a few years ago and are now selling fall squarely into capital gains treatment. If you’re running algorithmic trading bots or day-trading full time, you’re likely in business income territory.

Calculate your tax on crypto gains —>

How ACB Works for Crypto

Adjusted Cost Base (ACB) is how you figure out your actual gain or loss. For crypto, the CRA requires the weighted average cost method.

Here’s how it works in practice:

You buy 1 BTC at $40,000. Later, you buy another 1 BTC at $60,000. Your total cost is $100,000 for 2 BTC. Your ACB per BTC is $50,000.

Now you sell 1 BTC for $70,000.

Proceeds: $70,000
ACB of 1 BTC: $50,000
Capital gain: $20,000
Taxable capital gain (50%): $10,000

That $10,000 gets added to your income and taxed at your marginal rate. If you live in Ontario and earn $75,000 from your job in 2026, that sale adds $2,965 to your tax bill — about 14.8% of the gain.

If the CRA decided you were trading as a business, all $20,000 would be taxable as self-employment income: $5,693 of income tax plus $800 of CPP contributions, or $6,493 in total. That’s more than double.

This gets complicated fast when you have dozens of purchases at different prices across multiple exchanges over several years. Which brings us to record-keeping.

Record-Keeping Is Non-Negotiable

The CRA expects you to track every single transaction. Date, time, amount of crypto, cost in CAD at the time, proceeds in CAD at the time of disposition. For every trade. Keep those records for at least six years.

If you’ve been active in crypto for years and haven’t been tracking, you need to reconstruct your history. Most major exchanges let you download transaction histories. From there, tools like Koinly, CoinTracker, or CoinPanda can calculate your ACB and generate tax reports. A well-maintained spreadsheet works too, but it gets unwieldy past a few dozen transactions.

Don’t wait until April to sort this out. Pulling records from exchanges that may have changed their export formats (or shut down entirely) takes time.

Mining, Staking, and DeFi

Mining is generally treated as business income by the CRA. Its guidance says that in most cases mining counts as carrying on a business because of the scale and resources involved, and the value of the crypto you mine is included in business income when you earn it. The costs of mining — electricity, hardware depreciation, internet — can be deducted as business expenses. Estimate your mining tax with the self-employed calculator —>

Staking rewards are taxable as income. The CRA says rewards from staking on a centralized platform are generally income at the time they’re credited to your wallet on that platform, so you report their value when they arrive.

Airdrops are generally treated as income at fair market value when received, even if you didn’t ask for them. The CRA hasn’t published specific guidance on airdrops, so if you receive a large one, check with a tax professional.

DeFi yields — liquidity pool rewards, yield farming, lending interest — are likely taxable as income when received. The specific treatment depends on the nature of the arrangement, but expect to pay tax on the fair market value of what you receive.

For all of these, you then have a new ACB for the received crypto. If you later sell those mined or staked coins at a higher price, you have an additional capital gain (or loss) to report.

CRA Is Paying Attention

Canadian exchanges are cooperating with the CRA, and international information-sharing agreements mean that offshore exchanges aren’t the shield they used to be. The CRA has specifically flagged crypto as an enforcement priority. Unreported crypto income is treated the same as any other unreported income — penalties, interest, and potential prosecution in serious cases.

More reporting is on the way. Canada is implementing the OECD’s Crypto-Asset Reporting Framework (CARF), under which crypto platforms will report their users’ identities and transactions to the CRA, and the CRA will swap that information with dozens of other countries. The legislation to put it in place was still before Parliament as of October 2026, and the CRA has said platform reporting is set to begin in 2028. CARF doesn’t change what you report on your 2026 return — crypto dispositions have always been reportable — but it will make unreported trades much easier to spot.

If you have unreported crypto from prior years, consider a voluntary disclosure to the CRA before they come to you. The penalties are significantly reduced when you self-report.

See your full tax picture —>

Common Mistakes

Not reporting crypto-to-crypto trades. Swapping one coin for another is a disposition. Every swap needs to be reported.

Using FIFO instead of weighted average. The CRA requires the weighted average cost method for crypto in Canada. Using first-in-first-out (common in the US) will produce incorrect numbers.

Ignoring small transactions. That $50 NFT purchase or $20 swap still counts. The CRA expects all dispositions reported, regardless of size.

Assuming DeFi is invisible. Blockchain transactions are public and permanent. The CRA and third-party analytics firms can trace on-chain activity.

Not converting to CAD. All gains and losses must be reported in Canadian dollars, using the exchange rate at the time of each transaction. Don’t use year-end rates or rough estimates.