- Crypto ETFs maintain precise crypto, in order that they’re a extra direct solution 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 dwelling financial savings account (FHSA). (Extra on crypto and taxes under.)
It’s tax season—right here’s what you must 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, you might both owe capital positive aspects tax or have a capital loss that you should use to offset different capital positive aspects.
Right here’s how capital positive aspects 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 obtain 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 positive aspects tax. Right here’s the calculation:
Trudeau resigns—resulting in capital positive aspects tax uncertainty
Calculating your capital positive aspects tax may very well be fairly simple so long as you may have data of all of your transactions. Nevertheless, you probably have over $250,000 in capital positive aspects, issues could get extra sophisticated.
In case your capital positive aspects are over $250,000, your inclusion charge for the positive aspects 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 it will likely be carried out in 2025 and past.
Why? The capital positive aspects tax adjustments had not but handed into legislation when Prime Minister Justin Trudeau introduced his resignation and prorogued Parliament till March. Nevertheless, the Finance Division has said that in prorogation, the CRA will proceed to manage the adjustments. Right here’s what we all know to this point about capital positive aspects tax adjustments throughout prorogation.
Crypto worth swings are widespread
The costs of bitcoin, ethereum and different cryptocurrencies are speculative and topic to excessive swings. Whereas the long-term pattern for crypto seems to be sturdy, traders ought to take into account that deep and sudden bear markets are a part of crypto’s historical past—and ought to be anticipated sooner or later.
As all the time, train warning and solely take into account crypto if it aligns along with your monetary targets, time horizon and threat profile. Make investments solely as a lot cash as you’re keen to lose, and hold a lookout for crypto scams.
