- Crypto ETFs maintain precise crypto, so that they’re a extra direct method 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 house financial savings account (FHSA). (Extra on crypto and taxes beneath.)
It’s tax season—right here’s what you have 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. Consequently, should you bought crypto in 2024, you might both owe capital beneficial properties tax or have a capital loss that you should use to offset different capital beneficial properties.
Right here’s how capital beneficial properties tax works in Canada, together with for crypto: 50% of the capital achieve is added to your earnings 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 purchased 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 beneficial properties tax. Right here’s the calculation:
Trudeau resigns—resulting in capital beneficial properties tax uncertainty
Calculating your capital beneficial properties tax may very well be fairly easy so long as you’ve gotten data of all of your transactions. Nevertheless, in case you have over $250,000 in capital beneficial properties, issues could get extra sophisticated.
In case your capital beneficial properties are over $250,000, your inclusion charge for the beneficial properties above $250,000 may very well be two-thirds (66.67%). Though this larger 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 beneficial properties tax modifications had not but handed into regulation 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 modifications. Right here’s what we all know thus far about capital beneficial properties tax modifications throughout prorogation.
Crypto value 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 seems to be sturdy, buyers ought to remember the fact 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 contemplate 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.