Crypto Tax in Canada 2024: Mining, Staking, DeFi, and NFTs

Key takeaways

• CRA treats cryptocurrency as a commodity — gains are either business income or capital gains depending on intent and frequency
• Every trade, swap, NFT sale, DeFi transaction, and crypto-to-crypto exchange is a taxable event
• Mining income is business income; the fair market value of mined coins at the time of mining is included in income
• Staking rewards are taxable income when received, at fair market value in Canadian dollars
• Failing to report crypto gains is not a gray area — the CRA has explicit guidance and active enforcement

The CRA released its first detailed cryptocurrency guidance in 2013 and has expanded it significantly since. Despite this, many Canadians still treat crypto as untracked or untaxed. The CRA disagrees, and it has legal tools to compel exchanges to disclose customer data.

Business income vs. capital gains

Whether crypto gains are business income or capital gains depends on the facts. The CRA considers: the frequency of your transactions; the period of time you hold your coins; the nature of your activity; whether you have special knowledge; and whether you finance your purchases with borrowed money.

Day traders, arbitrageurs, and anyone running an automated trading strategy are almost certainly carrying on a business — all gains (and losses) are business income, fully taxable. Long-term investors who buy and hold for years are more likely to be reporting capital gains. The gray zone is regular buy-and-sell activity (weekly or monthly) — the CRA may assess this as business income even if you think of yourself as an investor.

Taxable events

Each of the following triggers a disposition and potential tax event: selling crypto for Canadian dollars; using crypto to buy goods or services; trading one cryptocurrency for another (BTC for ETH, for example); donating crypto to a non-registered charity; receiving crypto as payment for employment or services; and mining or staking coins.

A crypto-to-crypto trade is a deemed disposition at fair market value in Canadian dollars at the time of the trade. If you traded 1 ETH (worth $5,000 CAD) for 10 SOL, you have a disposition of the ETH at $5,000 and an acquisition of SOL at a cost of $5,000. If your adjusted cost base on the ETH was $2,000, you have a $3,000 gain at that point.

Mining

If you mine cryptocurrency as a business (running significant equipment, selling mined coins regularly), the fair market value of each coin at the moment it is mined is business income. Your cost basis for the coin is that fair market value. If you later sell the coin for more, the additional gain is also business income. If you mine at a loss, you can deduct allowable business expenses including electricity, hardware amortization, and internet costs.

Casual mining (one GPU, occasional rewards) may be treated as investment income rather than business income, but the CRA has not provided a bright-line test. The same factors as the general business income vs. capital gains analysis apply.

Staking and DeFi

The CRA's position is that staking rewards are taxable income when received, at the fair market value in Canadian dollars at the time of receipt. Your cost base for the staking rewards is that fair market value. If you later sell the staked coins for a gain above that cost base, the additional amount is a capital gain or business income depending on your overall activity.

DeFi transactions — providing liquidity, yield farming, lending, or borrowing against collateral — each need to be analyzed individually. Providing liquidity tokens in exchange for LP tokens may be a disposition. Earning yield in a DeFi protocol is income when received. The CRA has not issued specific DeFi guidance, but the general cryptocurrency rules apply to each step.

Record-keeping

You must keep records of every transaction: date, amount in crypto, fair market value in CAD at the time, the nature of the transaction, and the other party (if identifiable). Exchange statements and blockchain records are valid documentation. If you use multiple wallets and exchanges, you need to reconcile them all.

Crypto tax software (Koinly, CoinTracker, Crypto.com Tax) can import transaction histories from major exchanges and calculate your adjusted cost base and gains. These tools do not replace CRA reporting — they generate a report you use to populate your T1 return.