Canada Crypto Tax Guide 2025: CRA Rules, Schedule 3 & Adjusted Cost Base

The Canada Revenue Agency treats cryptocurrency as property, not currency, so every disposal - a sale, a trade for another coin, or a purchase of goods - is a taxable event. Here is exactly how the numbers flow onto your 2025 return: which cost-basis method the CRA actually requires, how the 50% inclusion rate applies, and where crypto shows up on Schedule 3 and Form T2125.

TL;DR

Crypto is property, not currency

The CRA's foundational position - unchanged since its first guidance and reaffirmed in Guide T4037 and Interpretation Bulletin IT-479R - is that cryptocurrency is not legal tender in Canada. It is treated as a commodity, similar to a stock or a piece of real estate. That single classification decision drives everything else: buying a coffee with Bitcoin is legally a barter transaction involving the disposition of property, exactly like it would be if you paid with a share of stock. There is no minimum-value exemption for spending crypto (unlike, say, some countries' rules for foreign currency), so in principle every crypto payment is a taxable event, no matter how small.

Capital gain or business income? The badges-of-trade test

Before you can calculate anything, you need to know which regime applies, because the tax treatment is very different:

• Capital gains (most individual investors): only 50% of the net gain is included in taxable income. Losses can only offset capital gains.
• Business income (active traders, crypto miners running a commercial operation): 100% of the profit is taxable as ordinary income, but business losses can be deducted against other income sources, and legitimate business expenses are deductible.

The CRA does not use a bright-line rule to decide which applies. Instead it looks at the same "badges of trade" factors used for securities trading: frequency and volume of transactions, how organized the activity is (business plan, dedicated equipment, systematic record-keeping), how quickly positions are flipped after acquisition, whether the activity is your primary source of income, and your stated intention at the time of purchase. A buy-and-hold investor who sells occasionally is almost always on the capital account. Someone running dozens of trades a week, or operating mining rigs as a commercial venture, is more likely to be assessed as carrying on a business. This is a facts-and-circumstances determination - if your activity is borderline, get it reviewed individually.

The 50% inclusion rate - confirmed unchanged for 2025

In April 2024 the federal government proposed raising the capital gains inclusion rate from one-half to two-thirds for gains above CAD 250,000 per year. That proposal caused real uncertainty going into the 2025 tax year. It never became law: the enabling bill died on prorogation of Parliament in January 2025, and Prime Minister Mark Carney's government formally cancelled the increase in March 2025. As a result, the inclusion rate for the entire 2025 tax year is a flat 50%, with no threshold and no exceptions related to the abandoned proposal. If you saw headlines about the two-thirds rate during 2024, disregard them for your 2025 return.

Adjusted Cost Base (ACB) - why FIFO is the wrong answer

This is the detail that trips up the most Canadian crypto investors, because most international crypto tax guides default to FIFO. Under the Income Tax Act, s.47(1), identical properties - which includes each type of cryptocurrency you hold - are subject to the Adjusted Cost Base rule: every unit of a given coin held across all your wallets and exchange accounts is pooled into a single, continuously-updated weighted-average cost, not tracked as discrete FIFO or LIFO "lots."

In practice: every time you acquire more of a coin, the ACB pool average shifts. When you dispose of some of it, the cost basis used for that disposal is the pool's current average cost per unit at that moment, not the price you paid for the specific units you happen to be selling. Acquisition fees are added into the ACB; disposal fees reduce your proceeds. If your report shows an "acquisition date range" next to a disposal rather than a single lot date, that is normal under ACB - it reflects the period over which the pool being averaged was built up, not a FIFO lot selection.

The superficial loss rule

If you sell crypto at a loss and reacquire the same type of coin within 30 calendar days before or after the sale (and still hold it 30 days after), the loss is denied under the superficial loss rules (ITA s.54, s.40(2)(g)(i), s.53(1)(f)) - the same "wash sale"-style rule that applies to stocks. The denied loss isn't lost forever: it's added back onto the ACB of the reacquired units, deferring the deduction until you eventually dispose of those units for good without reacquiring within the window.

Crypto-to-crypto swaps are fully taxable

Trading ETH for SOL, or any coin for any other coin, is a disposition of the coin you gave up and an acquisition of the coin you received - there is no rollover or deferral for crypto-to-crypto trades. You calculate a capital gain or loss on the coin disposed of (fair market value received, in CAD, minus its ACB) exactly as if you had sold it for cash and then separately bought the new coin.

Staking, mining, and airdrops: income first, then a capital gain later

Rewards from staking, mining, airdrops, and lending interest are generally taxed as ordinary income at their fair market value in CAD on the date you gain control of them. That income amount then becomes the ACB of the newly-received coins going forward. When you later sell or trade those coins, you calculate a separate capital gain or loss based on the price movement since receipt. Whether staking/mining is a personal hobby-level activity or a business (with different reporting and expense-deduction implications) depends on the same badges-of-trade analysis described above - if you're running mining as a commercial operation, both the mined coins and any capital gains on them are typically business income rather than split between income and capital treatment.

Where it lands on your return: Schedule 3 and Form T2125

For capital-account investors, crypto disposals are reported on Schedule 3 (Capital Gains or Losses), which includes a specific line item for cryptocurrency: total proceeds of disposition on line 15200 and the resulting gain or loss on line 15301. The taxable portion (50% of the net gain) flows through to line 12700 of your T1 General return.

If your crypto activity is classified as a business, it is instead reported on Form T2125 (Statement of Business or Professional Activities), with opening/closing inventory, cost of goods sold, and gross/net business profit reported the way any small business would report inventory and sales - the 50% inclusion rate does not apply to this income.

Foreign reporting: Form T1135

If the total cost of your "specified foreign property" - which the CRA has confirmed includes cryptocurrency held on foreign exchanges or in wallets - exceeded CAD 100,000 at any point during the year, you must file Form T1135. There's a simplified reporting method if the total stayed under CAD 250,000 all year, and detailed reporting is required above that threshold. Crypto held with a Canadian-based exchange generally doesn't count toward this threshold; foreign-hosted wallets and exchanges typically do.

What's not yet in force: CARF

Canada has committed to implementing the OECD's Crypto-Asset Reporting Framework (CARF), which will require crypto exchanges to automatically report user transaction data to the CRA (and exchange that data internationally), similar to how banks already report under FATCA/CRS. As of the 2025 tax year, CARF reporting obligations for exchanges are not yet in force in Canada - implementation is targeted for January 1, 2027. This doesn't reduce your existing obligation to self-report; it just means the CRA's automated cross-checking capability isn't live yet for the return you're filing now.

Converting foreign-currency amounts

Amounts denominated in USD, EUR, or any currency other than CAD must be converted using the exchange rate on the date of each transaction. The CRA generally accepts the Bank of Canada's daily posted rates, though a consistently-applied alternative independent source is also acceptable. Keep a record of whichever rate source you used, since the CRA can ask for it.

Loss offsetting and carryforward

Capital losses (including denied superficial losses, once they clear the 30-day window) can only be deducted against capital gains, not against employment or business income. Unused net capital losses can be carried back three years or carried forward indefinitely. Business losses follow entirely different rules and are not interchangeable with capital losses.

Filing deadline for 2025

The deadline to file your 2025 T1 return is April 30, 2026. If you or your spouse/common-law partner were self-employed at any point in 2025, the filing deadline extends to June 15, 2026 - but note this extension is for filing only: any balance of tax owing is still due April 30, 2026, and interest accrues on unpaid amounts from that date regardless of your filing deadline.

Conclusion

Canadian crypto tax comes down to three things most guides get wrong for this jurisdiction: cost basis is a pooled weighted average (ACB), not FIFO; the 50% inclusion rate survived 2025 unchanged despite the now-cancelled two-thirds proposal; and whether you're on the capital or business side of the line depends on a facts-based test, not a simple threshold. Get the classification right first - it changes every number after it.

This article is not tax advice. Consult a Canadian tax professional or accountant to evaluate your individual situation, particularly if your trading activity might be classified as a business.

Disclaimer: This article is for general informational purposes only and does not constitute tax advice. For individual tax advice, consult a licensed tax professional.