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Crypto Taxes: Calculation of Gain or Loss

Gain or loss is the difference between the proceeds received from the sale of the coin or token less the average adjusted cost base for that coin or token.

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Buy Bitcoin > Crypto Taxes > Calculation of Gain or Loss

Updated: March 24, 2021

Calculation of gain or loss for Canadian crypto tax reporting.

Gain or loss is the difference between the proceeds received from the sale of the coin or token less the average adjusted cost base for that coin or token.

Proceeds is equal to the consideration received for selling a particular coin or token like Bitcoin. The proceeds could be the FIAT currency received (i.e. Canadian dollars) or it could be the value of another coin or token received (i.e. Litecoin).

Adjusted cost base (ACB) of a particular coin or token is equal to the average price paid for that coin or token (i.e. Bitcoin, Litecoin, Ethereum, etc.). This average ACB can be calculated at any point in time, and cryptocurrency holders should keep detailed records on the average ACB calculation for each coin or token. Here is an example of a detailed calculation of the average ACB for Bitcoin:

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

Example Calculation of the Average Cost Base for Bitcoin

ACB Calculation
Purchase Date
-
Aug 5, 2016
Jul 1, 2017
Dec 15, 2017
Jul 12, 2019
Dec 18, 2020
Mar 12, 2021
Number of Coins
(A)
Openning
-
1.00
2.00
3.00
4.00
5.00
(B)
Purchased
1.00
1.00
1.00
1.00
1.00
1.00
(C)=(A)+(B)
Closing
1.00
2.00
3.00
4.00
5.00
6.00
ACB Calculation
Purchase Date
-
Aug 5, 2016
Jul 1, 2017
Dec 15, 2017
Jul 12, 2019
Dec 18, 2020
Mar 12, 2021
Cost of Coins
(D)
Openning
-
$800
$4,300
$29,300
$44,300
$74,800
(E)
Purchased
$800
$3,500
$25,000
$15,000
$30,500
$76,000
(F)=(D)+(E)
Closing
$800
$4,300
$29,300
$44,300
$74,800
$150,800
ACB Calculation
Purchase Date
-
Aug 5, 2016
Jul 1, 2017
Dec 15, 2017
July 12, 2019
Dec 18, 2020
Mar 12, 2021
Number of Coins
(A)
Openning
-
1.00
2.00
3.00
4.00
5.00
(B)
Purchased
1.00
1.00
1.00
1.00
1.00
1.00
(C)=(A)+(B)
Closing
1.00
2.00
3.00
4.00
5.00
6.00
Cost of Coins
(D)
Openning
-
$800
$4,300
$29,300
$44,300
$74,800
(E)
Purchased
$800
$3,500
$25,000
$15,000
$30,500
$76,000
(F)=(D)+(E)
Closing
$800
$4,300
$29,300
$44,300
$74,800
$25,133
ACB
(G)=(F)/(C)
Average
$800
$2,150
$9,767
$11,075
$14,960
$25,133
ACB Calculation
Purchase Date
-
Aug 5, 2016
Jul 1, 2017
Dec 15, 2017
Jul 12, 2019
Dec 18, 2020
Mar 12, 2021
ACB
(G)=(F)/(C)
Average
$800
$2,150
$9,767
$11,075
$14,960
$25,133
ACB Calculation
Purchase Date
-
Aug 5, 2016
Jul 1, 2017
Dec 15, 2017
July 12, 2019
Dec 18, 2020
Mar 12, 2021
Number of Coins
(A)
Openning
-
1.00
2.00
3.00
4.00
5.00
(B)
Purchased
1.00
1.00
1.00
1.00
1.00
1.00
(C)=(A)+(B)
Closing
1.00
2.00
3.00
4.00
5.00
6.00
Cost of Coins
(D)
Openning
-
$800
$4,300
$29,300
$44,300
$74,800
(E)
Purchased
$800
$3,500
$25,000
$15,000
$30,500
$76,000
(F)=(D)+(E)
Closing
$800
$4,300
$29,300
$44,300
$74,800
$150,800
ACB
(G)=(F)/(C)
Average
$800
$2,150
$9,767
$11,075
$14,960
$25,133

The calculation of the ACB for your cryptocurrency holdings is determined separately for each coin or token, and all purchases for that coin or token must be factored into the average ACB. Therefore, it does not matter if you purchased some of the coins or tokens on different exchanges or through your own personal wallet as all purchases affect the average ACB of that particular coin or token.

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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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