- Crypto ETFs maintain precise crypto, so that they’re a extra direct technique to achieve publicity to crypto in comparison with shares in a public firm engaged in crypto actions.
- Crypto ETFs are eligible for tax-advantaged accounts just like the tax-free financial savings account (TFSA), registered retirement financial savings plan (RRSP) and first residence financial savings account (FHSA). (Extra on crypto and taxes under.)
It’s tax season—right here’s what you want to know
The Canada Income Company (CRA) considers cryptocurrencies as commodities, the acquisition and sale of which may end up in a capital achieve or loss. In consequence, in case you bought crypto in 2024, it’s possible you’ll both owe capital features tax or have a capital loss that you should use to offset different capital features.
Right here’s how capital features tax works in Canada, together with for crypto: 50% of the capital achieve is added to your revenue and taxed at your marginal tax charge. Learn MoneySense’s information to crypto taxes in Canada, and my article about crypto ETF taxes in Canada.
Right here’s an instance: Let’s say you acquire 1 bitcoin for $62,722 on Jan 8, 2024, and bought it for $144,733 on Dec. 14, 2024. You’d owe $12,301.65 in capital features tax. Right here’s the calculation:
Trudeau resigns—resulting in capital features tax uncertainty
Calculating your capital features tax may very well be fairly simple so long as you might have information of all of your transactions. Nevertheless, when you have over $250,000 in capital features, issues could get extra difficult.
In case your capital features are over $250,000, your inclusion charge for the features above $250,000 may very well be two-thirds (66.67%). Though this increased charge was launched in 2024, there stays uncertainty on whether or not and the way will probably be applied in 2025 and past.
Why? The capital features tax modifications had not but handed into legislation when Prime Minister Justin Trudeau introduced his resignation and prorogued Parliament till March. Nevertheless, the Finance Division has acknowledged that in prorogation, the CRA will proceed to manage the modifications. Right here’s what we all know to date about capital features tax modifications throughout prorogation.
Crypto worth swings are frequent
The costs of bitcoin, ethereum and different cryptocurrencies are speculative and topic to excessive swings. Whereas the long-term development for crypto appears robust, traders ought to remember that deep and sudden bear markets are a part of crypto’s historical past—and needs to be anticipated sooner or later.
As all the time, train warning and solely think about crypto if it aligns along with your monetary objectives, time horizon and danger profile. Make investments solely as a lot cash as you’re prepared to lose, and hold a lookout for crypto scams.
