Wondering how much tax you’ll pay on cryptocurrency this year?
In this guide, we’ll share everything you need to know about how much cryptocurrency is taxed in Canada. We’ll break down differences in tax rates based on province and income level and go through a few simple strategies to legally reduce your tax bill.
How is cryptocurrency taxed in Canada?
In Canada, your cryptocurrency is subject to capital gains and ordinary income tax.
Capital gains tax: When you dispose of your cryptocurrency, you’ll incur a gain or loss depending on how the price of your crypto has changed since you originally received it. Examples of disposals include selling your crypto, trading your crypto for another crypto, and using your crypto to make a purchase. Ordinary income tax: When you earn cryptocurrency, you’ll recognize income based on the fair market value of your crypto at the time of receipt. Examples included staking and mining rewards.
50% of your capital gains and 100% of your ordinary income from cryptocurrency is considered taxable income. For more details, checkout out our complete guide to
. Canada crypto taxes What is the federal tax rate in Canada?
Here are the federal taxes you’ll be paying on your taxable income from cryptocurrency and other sources.
It’s also important to keep in mind the impact of local and provincial taxes (more on this later on!)
How do crypto tax brackets work?
Canada has a progressive tax system. That means that you’ll pay higher taxes on your income as you progress through different tax brackets.
What is the tax-free allowance in Canada?
It’s important to remember that all Canadians are entitled to a Basic Personal Amount (BPA) — a tax-free allowance on your taxable income from cryptocurrency and other sources. For the 2022 tax year, the BPA is $14,298.
How much is cryptocurrency taxed in my province?
In addition to federal tax rates, you’re required to pay provincial tax rates depending on where you’re located in Canada. Let’s break down tax rates by province.
Ontario tax rates Pro Tip: In 2022, Ontario started placing restrictions on buying all cryptocurrencies except Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. Retail investors are restricted to a maximum of $30,000 net buy limit for all other cryptocurrencies. Other eligible investors face a restriction of $100,000, while accredited investors have no restrictions. Alberta tax rates British Columbia tax rates Manitoba tax rates New Brunswick tax rates Newfoundland and Labrador tax rates Northwest Territories tax rates Nova Scotia tax rates Nunavut tax rates Prince Edward Island tax rates Quebec tax rates Saskatchewan tax rates Yukon tax rates How do I reduce my cryptocurrency taxes in Canada?
While there’s no way to evade cryptocurrency taxes legally, you can use the following strategies to legally reduce your crypto taxes.
Harvest your losses: Selling crypto at a loss comes with tax benefits. In Canada, cryptocurrency losses can be used to offset gains from cryptocurrency, stocks, and other assets. Take profits in low-income years: The lower your income, the less money you’ll pay in taxes. As a result, many investors choose to dispose of their cryptocurrency in years where their income is lower — for example, when they are in school full-time.
For more information, check out
our guide to reducing crypto taxes in Canada. How CoinLedger can help
Having trouble reporting your cryptocurrency taxes?
CoinLedger can help. More than 300,000 investors around the world use CoinLedger to file their cryptocurrency taxes in minutes. You can plug in your wallets and exchanges and generate a comprehensive tax report with the click of a button. . Get started with a free CoinLedger account today