If you've sold or traded cryptocurrency, you must report this taxable event. Here's how to manually report your cryptocurrency gains or losses:
- Determine your income type
- Business income: You trade often or spend a lot of time on crypto
- Capital gains/losses: You trade less often or spend less time on crypto
- Calculate your income, gain, or loss
- Track your adjusted cost base (ACB), proceeds, and related expenses for each trade
- Use a spreadsheet or specialized tracking service to maintain accurate records
- Report your crypto activity
- For capital gains:
- Navigate to the Capital Gains (and Losses) section in your tax profile
- Select "Crypto-assets" and enter the full amounts for each disposition
- For business income:
- Use the Business, Professional, and Commission Income section to complete a T2125
- Enter your gross revenue, costs, and expenses
- For capital gains:
Tip: The easiest way to report your cryptocurrency gains and losses through Wealthsimple Tax is to import them directly from your external wallet or exchange. With this feature, you can add transactions from over 300 exchanges, like Coinbase, Binance, Crypto.com and more. We'll calculate your capital gains or losses for you and automatically add them to your return.
Important notes:
- If you own cryptocurrency but haven't sold or traded it, you don't need to report income
- If you hold cryptocurrency outside Canada worth over $100,000 CAD, you may need to file form T1135
- When you enter the proper information in Wealthsimple Tax, it will automatically populate the T1135 form for you
- Failing to report cryptocurrency income may result in penalties and interest
Mining cryptocurrency:
- Report proceeds from mining as business income in the Business, Professional, and Commission Income section
- You can deduct related expenses (e.g., electricity costs)
Accepting cryptocurrency as payment:
- Record income at the fair market value of the cryptocurrency when received
- GST/HST registrants must collect and remit taxes as with cash payments
- Report capital gains/losses or business income when you dispose of the cryptocurrency
Tracking tools for crypto transactions:
- CRYPTOFINANCE: A Google Sheets plugin for tracking costs and proceeds
- adjustedcostbase.ca: Designed with Canadian tax rules in mind
- bitcoin.tax and cointracking: Useful for historical transaction data
Note: If using a U.S.-based tracking tool, ensure you're calculating your adjusted cost base (ACB) using the average cost method, not FIFO or LIFO, to comply with Canadian tax rules.
Remember:
- Keep detailed records of all your cryptocurrency transactions
- The CRA may request documentation to support your reported amounts
- Consider consulting a tax professional if you're unsure about your specific situation
For an easier way to report your cryptocurrency gains and losses, consider using Wealthsimple Tax's import feature for external wallets or exchanges.
If you have questions about how to report your cryptocurrency transactions for tax purposes, consider booking a session with a tax expert. If you need further assistance reporting your cryptocurrency gains or losses, please contact Wealthsimple support.
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