Many people I talk to don’t know much about legislation and tax related information for crypto in Canada. Ironically, neither does Canada. There is truly little legislation on cryptocurrency. First, in Canada it is not considered a “currency”. It is viewed as a commodity such as a precious metal like gold or silver.
Just like any commodity, crypto is a taxable event. You can avoid this by depositing into a Tax-free savings account. Otherwise, the factors that will be considered for tax purposes are the following:
- When did you buy it? (Cost of Virtual Currency)
- Did you make or lose money? (Buying high and selling for a loss or buying low and selling high)
- I must report any holding outside of Canada more than $100,000 CAD
For anyone mining in Canada the results of crypto mining are considered of a commercial nature. The dollar amounts to be noted at the time the cryptocurrency is earned.
We do have to give Canada credit as they were the first country to regulate cryptocurrencies in the context of anti-money laundering. Canada has in place the “The Proceeds of Crime (Money-Laundering) and Terrorist Financing Act”, PCMLTFA for short.
In this act it states that any entities dealing in virtual currencies be treated as “Money Services Businesses” (MSB). MSB’s are required to submit to following “Financial Transactions and Reports Analysis Centre of Canada” (FINTRAC).
- Report on cross-border transactions
- Report and submit records of transactions exceeding $10,000 at once or in a 24-hour period over multiple transactions.
MSB’s are also required to perform a “Know-Your-Client” verification on anyone who wants to use your platform. When you have signed up for anything crypto related, I’m sure you are familiar with this without me explaining it.
I hope this helps you have better knowledge when it comes to crypto taxes in Canada. For everything crypto return to the homepage for the latest content.