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Crypto Taxes: Reportable Gain or Loss

Cryptocurrency gains and losses are reportable. For Canadian investors the tax treatment is either capital gains and losses, or Business income, depending on your situation.

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Buy Bitcoin > Crypto Taxes > Reportable Gain or Loss

Updated: March 24, 2021

One hundred percent of all cryptocurrency gains and losses are reportable.

If you are not in the business of trading cryptocurrency (see section on capital gains vs. Business income) then the gains and losses are considered capital gains and losses.

Only 50 per cent of capital gains are taxable (called taxable capital gains) and only 50 per cent of capital losses are usable (called allowable capital losses). Allowable capital losses can only be used to reduce taxable capital gains. If your allowable capital losses exceed your taxable capital gains then you have a net allowable capital loss.

This net allowable capital loss can be carried back to a maximum of three previous tax years to reduce previously reported taxable capital gains or it can be carry-forward indefinitely to offset future taxable capital gains.

Allowable capital losses from cryptocurrency can be used to offset taxable capital gains from other types of investments, and allowable capital losses from other types of investments can be used to offset taxable capital gains from cryptocurrency.

Crypto Taxes: Buying & holding

Buying cryptocurrency is not a taxable event

Crypto Taxes: Selling & trading

The sales of crypto must be reported to CRA

Calculation of crypto gain or loss

Proceeds minus the average adjusted cost base

Reportable gain or loss

All crypto gains and losses are reportable

Books and tax records

Keep records of your cryptocurrency transactions

Capital gain vs. Business income

Capital gains and losses vs. Business income

Calculation of reportable gains and losses resulting in a net taxable capital gain subject to tax.

Here is an example of the calculation of reportable gains and losses resulting in a net taxable capital gain subject to tax.

Sale of Bitcoin

Date of Sale
Coins Sold
Proceeds
Average ACB
Gain or Loss
Taxable Portion
Taxable Capital Gains
12/25/2020
1.00
$ 35,000
$ 20,000
$ 15,000
50%
$ 7,000

Sale of Litecoin

Date of Sale
Coins Sold
Proceeds
Average ACB
Gain or Loss
Taxable Portion
Taxable Capital Gains
02/28/2020
256.00
$ 20,000
$ 22,000
-$ 2,000
50%
-$ 1,000

Sale of Royal Bank Sales

Date of Sale
Coins Sold
Proceeds
Average ACB
Gain or Loss
Taxable Portion
Taxable Capital Gains
03/20/2020
128.00
$ 10,000
$ 20,000
-$ 10,000
50%
-$ 5,000

Summary of sales for the reporting year

All taxable capital gains
All allowable capital losses
Net taxable capital gains
$ 7,500
-$ 6,000
$ 1,500

Here is an example of the calculation of reportable gains and losses resulting in a net allowable capital loss that can be used to reduce capital gains reported in any of the three previous taxation years or any future taxation year

Sale of Bitcoin

Date of Sale
Coins Sold
Proceeds
Average ACB
Gain or Loss
Taxable Portion
Taxable Capital Gains
11/6/2020
1.00
$ 20,000
$ 35,000
-$ 15,000
50%
-$ 7,500

Sale of Litecoin

Date of Sale
Coins Sold
Proceeds
Average ACB
Gain or Loss
Taxable Portion
Taxable Capital Gains
11/13/2020
256.00
$ 22,000
$ 20,000
$ 2,000
50%
$ 1,000

Sale of Royal Bank Sales

Date of Sale
Coins Sold
Proceeds
Average ACB
Gain or Loss
Taxable Portion
Taxable Capital Gains
11/20/2020
128.00
$ 20,000
$ 10,000
$ 10,000
50%
$ 5,000

Summary of sales for the reporting year

All taxable capital gains
All allowable capital losses
Net taxable capital gains
$ 6,000
-$ 7,500
- $ 1,500
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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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