- Crypto ETFs hold actual crypto, so they’re a more direct way to gain exposure to crypto compared to shares in a public company engaged in crypto activities.
- Crypto ETFs are eligible for tax-advantaged accounts like the tax-free savings account (TFSA), registered retirement savings plan (RRSP) and first home savings account (FHSA). (More on crypto and taxes below.)
It’s tax season—here’s what you need to know
The Canada Revenue Agency (CRA) considers cryptocurrencies as commodities, the purchase and sale of which can result in a capital gain or loss. As a result, if you sold crypto in 2024, you may either owe capital gains tax or have a capital loss that you can use to offset other capital gains.
Here’s how capital gains tax works in Canada, including for crypto: 50% of the capital gain is added to your income and taxed at your marginal tax rate. Read MoneySense’s guide to crypto taxes in Canada, and my article about crypto ETF taxes in Canada.
Here’s an example: Let’s say you bought 1 bitcoin for $62,722 on Jan 8, 2024, and sold it for $144,733 on Dec. 14, 2024. You’d owe $12,301.65 in capital gains tax. Here’s the calculation:
Trudeau resigns—leading to capital gains tax uncertainty
Calculating your capital gains tax could be pretty straightforward as long as you have records of all your transactions. However, if you have over $250,000 in capital gains, things may get more complicated.
If your capital gains are over $250,000, your inclusion rate for the gains above $250,000 could be two-thirds (66.67%). Although this higher rate was introduced in 2024, there remains uncertainty on whether and how it will be implemented in 2025 and beyond.
Why? The capital gains tax changes had not yet passed into law when Prime Minister Justin Trudeau announced his resignation and prorogued Parliament until March. However, the Finance Department has stated that during prorogation, the CRA will continue to administer the changes. Here’s what we know so far about capital gains tax changes during prorogation.
Crypto price swings are common
The prices of bitcoin, ethereum and other cryptocurrencies are speculative and subject to extreme swings. While the long-term trend for crypto looks strong, investors should keep in mind that deep and sudden bear markets are part of crypto’s history—and should be expected in the future.
As always, exercise caution and only consider crypto if it aligns with your financial goals, time horizon and risk profile. Invest only as much money as you’re willing to lose, and keep a lookout for crypto scams.