Crypto tax in Canada 2026 — how CRA taxes Bitcoin, Ethereum, and NFTs

The basic tax treatment of crypto

Because CRA treats crypto as a commodity — like gold, or shares in a company — different transactions trigger different tax outcomes. Here is how each type works.

Buying crypto

Buying cryptocurrency with Canadian dollars is not a taxable event. You have acquired an asset at a cost. Nothing to report yet. Your adjusted cost base (ACB) is set at the amount you paid, including exchange fees.

Selling crypto for CAD

When you sell crypto for Canadian dollars, you have disposed of an asset. The difference between your proceeds and your ACB is a capital gain (or capital loss). For individuals in 2026, 50% of the gain is included in income and taxed at your marginal rate.

Trading crypto for crypto

This is where many people are surprised. Trading Bitcoin for Ethereum — or any coin for any other coin — is a taxable disposition. CRA considers that you have sold the first coin at its fair market value in Canadian dollars at the moment of the trade. You calculate a capital gain on that disposition, and the coin you receive has a new ACB equal to what you paid for it (i.e., the FMV of what you gave up).

Spending crypto on goods and services

Paying for something with crypto is also a taxable disposition. If you bought 0.01 BTC for $200 and spent it on a $500 purchase when Bitcoin had risen, you have a $300 capital gain on that 0.01 BTC. Every payment is a disposition at FMV.

Mining crypto

Mining income is not a capital gain. CRA treats mining rewards as income — either employment income (rare) or business income — included 100% in the year you receive them, at their fair market value in CAD on the date of receipt. The FMV when received also becomes your ACB for those coins, so when you later sell them, only the gain above that ACB is subject to capital gains treatment.

Staking rewards

CRA's position is that staking rewards are income when received, valued at FMV at the time of receipt. That FMV becomes your ACB. When you eventually sell those staked coins, you have a capital gain (or loss) on top of the income you already declared. You are taxed twice on two different events — income when earned, capital gain when sold above ACB.

Capital gain vs. business income — which applies?

This is the biggest question in crypto tax, because the answer determines your effective rate. Capital gains get the 50% inclusion rate — only half your gain is taxable. Business income is included at 100%, like employment income.

CRA does not draw a bright line. It looks at the totality of your behaviour and applies established factors from decades of case law on commodity trading. The key indicators are frequency of transactions, the holding period (did you sell quickly after buying?), whether you have specialized market knowledge, whether you use margin or leverage, and whether the activity has the character of a commercial operation.

A useful way to think about it: someone who bought $5,000 of Ethereum in 2022 and sold in 2026 is clearly investing — that is capital. Someone making 200 trades per week, using leverage, running scripts to exploit price discrepancies across exchanges, and treating it as a second job — CRA would argue that is a business, and every gain is business income.

Most retail investors who buy and occasionally sell crypto will be taxed on capital account. Most active day traders and anyone running automated arbitrage strategies will be taxed on income account. The line between the two is fact-specific and worth getting right before you file, not after CRA reassesses you.

How to calculate your capital gain (ACB tracking)

Canada uses the average cost method for calculating ACB on identical properties — the same rule that applies to stocks. Every time you buy more of the same cryptocurrency, your total cost is averaged across all units you hold. You cannot cherry-pick which coins you "sold" to minimize a gain.

Consider this example. You buy 1 ETH for $2,000 in January, then buy 1 more ETH for $3,000 in March. Your total cost is $5,000 for 2 ETH. Your ACB is $2,500 per ETH. In September, you sell 1 ETH for $4,000. Your capital gain is $4,000 minus $2,500 = $1,500. At the 50% inclusion rate, $750 is added to your taxable income.

The complication with crypto is scale. Most active crypto users have hundreds or thousands of transactions — each buy adjusts the ACB, each trade triggers a disposition and a new ACB for the acquired coin. Doing this manually in a spreadsheet is possible for light activity; for anything beyond a dozen trades per year, a dedicated crypto tax tool is the practical answer.

Staking rewards and airdrops add to your ACB at the FMV on the date received. That FMV was already included in your income, so you are not double-taxed on it — you are setting the cost base for future capital gains calculations correctly.

DeFi complications

Decentralized finance introduces transactions that CRA has not formally addressed. The positions below reflect the most widely accepted conservative approach among Canadian tax professionals — but this is an evolving area, and CRA has not issued binding guidance on most of it.

Liquidity pool deposits

When you deposit tokens into a liquidity pool (Uniswap, Curve, and similar), you typically receive LP tokens representing your share of the pool. The most conservative interpretation — and the one most advisors use — is that depositing tokens into a liquidity pool is a disposition of those tokens at their FMV at that moment. You receive LP tokens with an ACB equal to what you gave up. When you withdraw and receive your tokens back (usually in different proportions), that is another disposition of the LP tokens.

Wrapped tokens

Wrapping Bitcoin into WBTC, or any similar cross-chain wrapping, is debated. Some practitioners treat it as a disposition of the underlying token; others argue the economic substance is unchanged and no disposition has occurred. CRA has not issued guidance. The conservative approach treats it as a disposition.

Cross-chain bridges

The same analysis applies to bridging tokens across chains — for example, moving USDC from Ethereum to Arbitrum. Whether this is a disposition is unresolved. Pending guidance, many advisors treat cross-chain bridges the way they treat wrapped tokens: potentially a disposition at FMV.

Impermanent loss

CRA has issued no guidance on impermanent loss. Most Canadian tax advisors treat it as a capital loss realized when you withdraw from the liquidity pool, at the point you can actually calculate the loss. Until you withdraw, there is nothing to report.

The common thread in all of these: where CRA is silent, document everything. Record the FMV at every step, keep notes on the transactions and your reasoning, and consider getting a written tax opinion if the amounts are material.

NFTs

CRA treats NFTs as capital property by default, subject to the same capital gain/business income analysis that applies to cryptocurrency generally. If you buy NFTs as investments and occasionally sell them, you are likely on capital account. If you flip NFTs frequently with the intent of profit, CRA may argue you are running a business.

Artists and creators who mint NFTs and sell them are in a different position. The NFT is inventory, not an investment — it is something you created to sell. That means the proceeds are business income, reported on Form T2125 (Statement of Business Activities). The same applies to royalties you receive from secondary sales of your NFTs: those are ongoing business income, not capital gains.

The practical difference is significant. A collector who bought an NFT for $500 and sold it for $5,000 reports a $4,500 capital gain — $2,250 taxable. A creator who minted that same NFT with negligible cost and sold it for $5,000 reports $5,000 of business income — fully included at their marginal rate.

Reporting requirements

Capital gains on Schedule 3

Capital gains from crypto dispositions are reported on Schedule 3 of your T1 return, in the same section as stock sales. You report proceeds, ACB, outlays and expenses (exchange fees count), and the resulting gain or loss. If you have business income from mining, staking, or trading as a business, that goes on Form T2125 instead.

T1135 — Foreign income verification

If the total cost of your foreign property exceeded $100,000 CAD at any point during the year, you must file Form T1135 (Foreign Income Verification Statement). Crypto held on foreign exchanges — Coinbase, Binance, Kraken — counts as foreign property. Crypto held in a self-custody wallet has an unclear situs, but the conservative position includes it. CRA has been increasing scrutiny of T1135 compliance. The penalties for failing to file are $25 per day to a maximum of $2,500, plus 5% of the cost amount if you do not comply after demand.

CRA already has your exchange data

Canadian exchanges are required to report under AML/CTF legislation and have provided transaction data to CRA in response to audit demands. CRA sent out thousands of letters to cryptocurrency investors between 2018 and 2024 requiring them to explain their holdings and transactions. Do not assume your crypto activity is invisible because it is digital.

Voluntary Disclosure Program

If you failed to report crypto gains in prior years — 2017 through 2024 were high-activity periods — the Voluntary Disclosure Program (VDP) lets you come forward, pay the tax and interest, and avoid penalties. The VDP is only available before CRA contacts you about the issue. Once CRA has begun an audit of your crypto activity, the window closes.

Record-keeping — what you actually need

CRA requires you to keep records supporting your tax return for a minimum of six years from the end of the tax year. For crypto, that means keeping records of every transaction: the date, the type of transaction (buy, sell, trade, stake, airdrop), the amount in coins, the CAD fair market value at the time of the transaction, the exchange or wallet involved, and the transaction hash.

Every major exchange lets you export a CSV of your transaction history. Download and save those files for every year you have traded. Do not rely on the exchange keeping them indefinitely — exchanges have failed, been hacked, and changed their data retention policies. Your records are your responsibility.

For anyone with significant activity, third-party tools like Koinly, CoinTracker, or CryptoTaxCalculator can import exchange CSVs and wallet addresses, calculate your ACB automatically across thousands of transactions, and generate a Schedule 3-ready capital gains report. They cost $50–$200 per tax year and pay for themselves immediately at any meaningful portfolio size.

For complex situations — DeFi activity, mining operations, staking income across multiple chains, or portfolios worth more than $100,000 — a CPA who has filed crypto returns before is worth the fee. The cost of getting it wrong (missed dispositions, incorrect ACB, a missed T1135) is much higher than the cost of getting it right.