- Crypto ETFs maintain precise crypto, so that they’re a extra direct strategy 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 under.)
It’s tax season—right here’s what it’s worthwhile 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, when you offered crypto in 2024, you could both owe capital beneficial properties tax or have a capital loss that you should utilize 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 revenue and taxed at your marginal tax fee. 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 acquire 1 bitcoin for $62,722 on Jan 8, 2024, and offered 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 have got information of all of your transactions. Nevertheless, in case you have over $250,000 in capital beneficial properties, issues could get extra difficult.
In case your capital beneficial properties are over $250,000, your inclusion fee for the beneficial properties above $250,000 may very well be two-thirds (66.67%). Though this greater fee was launched in 2024, there stays uncertainty on whether or not and the way it is going to be carried out in 2025 and past.
Why? The capital beneficial properties tax modifications 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 modifications. Right here’s what we all know to date about capital beneficial properties tax modifications throughout prorogation.
Crypto worth swings are frequent
The costs of bitcoin, ethereum and different cryptocurrencies are speculative and topic to excessive swings. Whereas the long-term pattern for crypto appears sturdy, buyers ought to remember the fact that deep and sudden bear markets are a part of crypto’s historical past—and ought to be anticipated sooner or later.
As at all times, train warning and solely think about crypto if it aligns along with your monetary objectives, time horizon and threat profile. Make investments solely as a lot cash as you’re keen to lose, and preserve a lookout for crypto scams.