With capital gains and losses, only 50 per cent of the gain/loss is included, with business income, 100 per cent of the gain or loss is deductible against all sources of income.Join Coinberry
Buy Bitcoin > Crypto Taxes > Capital Gain vs. Business Income
Updated: March 24, 2021
Determining the tax treatment of Bitcoin and cryptocurrency gains and losses.
There is a difference in the tax treatment of capital gains and losses vs. Business income or loss. With capital gains and losses, only 50 per cent of the gains are included into income and only 50 per cent of the losses are deductible against capital gains. With business income on the other hand, 100 per cent of the gain is included into income and 100 per cent of the loss is deductible against all sources of income. It is important to determine if the cryptocurrency activities would be treated as capital or business.
CRA uses the following factors to ascertain whether a taxpayer's conduct indicates the carrying on of a business:
Crypto Taxes: Buying & holding
Buying cryptocurrency is not a taxable event
Crypto Taxes: Selling & trading
The sales of crypto must be reported to CRA
Proceeds minus the average adjusted cost base
All crypto gains and losses are reportable
Keep records of your cryptocurrency transactions
Capital gains and losses vs. Business income
Although none of the individual factors listed above may be sufficient to characterize the activities of a taxpayer as a business, the combination of a number of these factors may well be sufficient for that purpose. If any of these factors apply, it would be prudent to seek professional advice from a tax specialist to properly ascertain if the gain or loss is to be reported as capital or business.Start Trading
Coinberry believes that the information provided in this section is reliable and is provided to the best of our ability based on the information available to us, however this information may not reflect all required adjustments. The information provided in this section should not be used for the purpose of tax reporting as certain events are dependent on individual circumstances. Please read our full disclaimer.
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