The Canada Revenue Agency (CRA) treats cryptocurrency as a commodity, not as legal tender. That single classification drives the whole tax treatment: when you dispose of crypto, the result is either business income (100% taxable) or a capital gain (taxed at the 50% inclusion rate), depending on the facts of how you hold and use it. Crypto-to-crypto trades and paying for goods or services with crypto are also dispositions. This guide explains how the income-versus-capital distinction works, what counts as a taxable event, and which inclusion rate applies for 2025 and 2026.
Crypto is a commodity, not currency
The starting point is that the CRA does not treat cryptocurrency as money. It is treated as a commodity for income tax purposes. Because it is property rather than legal tender, disposing of it is a taxable event measured against its adjusted cost base, in the same way as disposing of any other property.
Source: canada.ca — guide for cryptocurrency users and tax professionals
Income account or capital account?
The most important question for any crypto holder is whether a gain is business income or a capital gain, because the difference roughly doubles the taxable amount:
- On the income account, the gain is business income and is 100% taxable. This typically applies where activity has the character of a business — for example, frequent, organized trading carried on in a commercial manner.
- On the capital account, the gain is a capital gain, and only the 50% inclusion applies. This typically fits an investor holding crypto for longer-term appreciation.
Whether a given taxpayer is on the income or capital account depends on the facts — frequency of transactions, intention, time spent, financing and the way the activity is conducted. The same is true of losses: a business loss is fully deductible against other income, while a capital loss is only deductible against taxable capital gains.
Source: canada.ca — guide for cryptocurrency users and tax professionals
What counts as a disposition
A common misconception is that tax only applies when crypto is cashed out to Canadian dollars. In fact, several everyday actions are dispositions that can trigger a gain or loss:
- Trading one cryptocurrency for another — a crypto-to-crypto trade is a disposition of the coin you give up.
- Using cryptocurrency to buy goods or services — this is treated as a barter transaction, with the disposition measured at the value of what you received.
- Selling crypto for fiat currency, the obvious case.
Each of these is measured against the adjusted cost base of the crypto disposed of, so accurate records of what each unit cost — and its value at each transaction — are essential.
Source: canada.ca — guide for cryptocurrency users and tax professionals
The 50% inclusion rate for 2025-2026 — and the cancelled increase
For a gain on the capital account, the inclusion rate is 50% for 2025 and 2026: half the gain is added to taxable income and taxed at the holder's marginal rate, while the other half is tax-free.
A proposed increase of the inclusion rate to 66.67% was cancelled on March 21, 2025. That proposed higher rate does not apply — the long-standing 50% rate continues for capital-account crypto gains. (Gains on the income account remain fully taxable as business income; the inclusion rate concerns only capital gains.) For the calculation mechanics, see our capital gains tax in Canada guide and the capital gains tax calculator.
Source: canada.ca — guide for cryptocurrency users and tax professionals
Why record-keeping is the hard part
Because every trade, swap and purchase can be a disposition, the practical challenge is tracking the adjusted cost base and value of every transaction. A holder who has made hundreds of trades across multiple platforms still needs to compute the cost base and proceeds for each one to report the correct income or gain. Good records — exchange exports, wallet histories and transaction-level detail — are what make an accurate, defensible return possible.
How RN Canada helps
RN Canada helps Alberta and BC individuals and businesses report cryptocurrency correctly: assessing whether activity belongs on the income or capital account, reconstructing the adjusted cost base across exchanges and wallets, and reporting dispositions — including crypto-to-crypto trades and crypto purchases — at the right inclusion rate. We coordinate crypto reporting with the rest of a return so business income and capital gains are treated consistently. Our bookkeeping and tax filing service covers the compliance end to end. To get your crypto tax position right, contact us.
This is general information, not personalized tax advice. Speak to us about your specific situation through our contact page.
Frequently asked questions
The Canada Revenue Agency treats cryptocurrency as a commodity, not as legal tender. When you dispose of crypto, the gain is taxed either on the income account as business income, which is 100% taxable, or on the capital account as a capital gain, depending on the facts. For a capital gain, the inclusion rate is 50%, so half the gain is added to taxable income.
Yes. Trading one cryptocurrency for another is a disposition for tax purposes, and using cryptocurrency to buy goods or services is treated as a barter transaction. Both can trigger a taxable gain or loss measured against the adjusted cost base of the crypto you gave up, even though no traditional currency changed hands.
The capital gains inclusion rate is 50% for 2025 and 2026, so half of a capital gain on crypto is taxable. A proposed increase of the inclusion rate to 66.67% was cancelled on March 21, 2025, and does not apply. Crypto gains on the income account remain fully taxable as business income.