Bitcoin and Canadian Tax Law: What Changed in 2025

Disclaimer- Netcoins cannot provide tax advice. This document is made for general information only. The contents of this document are taken from reputable sources, and is not Netcoins own opinion. Please consult a tax professional with tax related questions related to your cryptocurrency activity. 

Here’s a typical short story in regards to Bitcoin and taxes in Canada, a Canadian investor sells a few Bitcoins after the spring price surge only to discover that their tax bill is much higher than expected. It’s a common event in 2025, as Bitcoin’s price volatility, shifting tax proposals, and evolving CRA oversight have caught many holders by surprise.

For most Canadians using centralized exchanges (CEXs) like Netcoins, understanding how crypto taxes work is no longer optional, it’s essential. While Bitcoin’s price cycles capture headlines, the real financial impact often comes at tax time.

In 2025, Canada’s core tax rules for Bitcoin remain largely consistent, but several policy shifts and new reporting frameworks mark a maturing regulatory environment. The reversal of the proposed capital gains inclusion rate hike and the introduction of the Crypto-Asset Reporting Framework (CARF) stand out as major developments. Together, they signal a balance between investor relief and stricter transparency especially relevant for CEX users managing their Bitcoin holdings.

The Basics: How Bitcoin and Taxes Work in Canada

What Makes Bitcoin Taxable?

Under the Canada Revenue Agency (CRA), Bitcoin is classified as a digital commodity, not a currency. This means it’s taxed similarly to stocks, gold, or other investment assets. Merely holding Bitcoin in your wallet is not a taxable event. Tax obligations arise only when you dispose of it, that is when you sell, trade, or spend your Bitcoin (1).

Common taxable events for CEX users include (6):

• Selling Bitcoin for Canadian dollars or another fiat currency.
  
  
• Trading Bitcoin for another cryptocurrency (e.g., swapping BTC for ETH).
  
  
• Using Bitcoin to purchase goods or services.
  
  

Non-taxable events include:

• Buying Bitcoin with Canadian dollars.
  
  
• Transferring Bitcoin between your own wallets (CEX to hot/cold wallet).
  
  

Capital Gains vs. Business Income

Most everyday investors report Bitcoin profits as capital gains. Under current rules, only 50% of the capital gain is taxable at your marginal income tax rate (2).

• Example: If you bought 1 BTC for $30,000 and sold it for $40,000, your $10,000 profit means $5,000 is taxable as a capital gain.
  
  

Frequent traders or those running crypto-related businesses, however, may fall under business income, meaning 100% of profits are taxable. The distinction depends on activity level, intent, and organization, something the CRA assesses case by case.

Aspect

Capital Gains (50% Inclusion)

Business Income (100% Taxable)

Applicability

Long-term holding/selling

Day trading, mining, flipping

Tax Rate

Marginal rate on 50% of gain

Marginal rate on 100% of income

Deductible Losses

Yes, against other gains

Yes, against all income

CEX Relevance

High (casual traders)

Low (unless frequent trading)

Adjusted Cost Base (ACB): The Cornerstone of Tracking

CEX users should maintain an Adjusted Cost Base (ACB) the average purchase cost of their Bitcoin, including fees. The CRA requires this average cost method rather than FIFO (first-in, first-out). Most exchanges offer exportable CSVs, and software tools like Koinly or CoinLedger automate this calculation.

Core Laws and Regulations Governing Crypto Taxes in Canada

CRA’s Foundational Guidance

Since 2019, the CRA has treated all crypto transactions as “dispositions of property” under the Income Tax Act (ITA). There are no special “crypto tax laws” per se—Bitcoin simply fits within the existing framework for commodities (3).

All disposals must be reported on Schedule 3 (Capital Gains) of your T1 Income Tax Return. The standard filing deadline is April 30, or June 15 for self-employed individuals (though payment is still due by April 30) (4).

Provincial Variations

Federal tax rules apply nationwide, but combined federal and provincial rates can significantly affect outcomes. For instance, Ontario’s top combined rate exceeds 53%, while Alberta’s sits closer to 48%. Your province of residence determines your effective rate.

Anti-Avoidance Rules (7)

• Superficial loss rule: You cannot claim a capital loss if you repurchase the same or identical crypto within 30 days.
  
  
• GST/HST: Not applicable to personal crypto sales, but applies to mining or business activities.
  
  
• Audit focus: CRA’s data-sharing with major CEXs has increased audit frequency. Penalties can reach 50% of unpaid taxes plus interest.
  
  

Key Developments: What Changed in 2025

1. Reversal of the Capital Gains Inclusion Rate Hike

In 2024, the federal budget proposed raising the inclusion rate on capital gains from 50% to 66.67% for gains exceeding $250,000, a move that alarmed many high-net-worth Bitcoin holders.

However, in March 2025, the government scrapped the increase, maintaining the 50% inclusion rate for all taxpayers. For Bitcoin investors, especially those realizing large gains during the 2025 bull market, this reversal provided significant relief (8).

2. The Crypto-Asset Reporting Framework (CARF) 

In August 2025, Canada announced plans to adopt the OECD’s Crypto-Asset Reporting Framework (CARF) through amendments to the Income Tax Act. Under CARF, exchanges, brokers, and wallet providers will be required to report crypto user transaction data such as sales and transfers to the CRA.

The system, scheduled to take effect on January 1, 2026, mirrors the T5008 slip model used for traditional securities. While it increases transparency and compliance monitoring, it also simplifies reporting for everyday users, as much of the necessary data will be pre-submitted by CEXs (5).

3. Other 2025 Guidance Updates

• The CRA clarified DeFi and staking rules in April 2025, categorizing certain yield-generating activities as income rather than capital gains.
  
  
• Bitcoin spot holding remains unaffected.
  
  
• New rules also target foreign-held crypto accounts, expanding CRA data-sharing with offshore exchanges.

Focus on CEX Users: Practical Implications and Strategies

Why CEXs Complicate Taxes

CEX platforms make crypto accessible but often lack comprehensive tax tools. Transaction histories can be complex, especially with frequent trades or cross-asset swaps.

With CARF on the horizon, most major exchanges operating in Canada are expected to roll out CRA-ready reporting features by the 2026 filing season.

Step-by-Step Compliance for Bitcoin Holders (9,10,11,12)

1. Export your annual transaction report from your CEX.
   
   
2. Calculate ACB and realized gains using software (e.g., Koinly, CoinLedger).
   
   
3. Report your totals on Schedule 3 of your tax return.
   
   
4. Offset capital losses against other capital gains where possible.
   
   

Tax Optimization Tips

• Hold long-term: Longer holding periods typically strengthen your case for capital gains treatment.
  
  
• Harvest losses: Sell underperforming assets before year-end to offset gains (mind the 30-day rule).
  
  
• Stay organized: Keep receipts, wallet addresses, and fiat conversion records for at least six years.
  
  

Tool

Key Feature for BTC Taxes

Cost

Koinly

CEX API sync, ACB calculator

Free tier; $49+ for full reports

CoinLedger

Provincial rate breakdowns

$49/year

CRA My Account

Manual filing for simple returns

Free

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Staying Compliant: Actionable Next Steps

1. Maintain accurate records: Store all CEX statements, wallet addresses, and receipts.
   
   
2. Prepare early for CARF: Begin organizing 2025 data so that January 2026 reporting transitions smoothly.
   
   
3. Consult professionals: If your crypto portfolio exceeds $50,000 or involves complex trades, seek a crypto-literate accountant.
   
   
4. Use CRA resources:
   
   
   
   • CRA Cryptocurrency Guide
     
     
   • Income Tax Filing Portal
     
     

In 2025, the fundamentals of Bitcoin taxation in Canada remain familiar, crypto is taxed as a commodity, and capital gains retain their 50% inclusion rate (13). But beneath that stability, new compliance infrastructure is taking shape.

With the cancellation of the capital gains hike and the upcoming CARF framework, Canadian Bitcoin holders can expect clearer reporting expectations but tighter oversight.

For users trading or holding Bitcoin on CEXs, now is the time to prepare: download records, track your cost base, and stay proactive. Taxes might not be exciting, but handling them correctly ensures that when Bitcoin’s next bull run arrives, you’ll be ready to enjoy it without any surprises from the CRA.

Recourses:

1. Canada Crypto Tax: How Much You Have to Pay in 2025
2. Guide to Crypto Tax in Canada (2025 CRA Rules)
3. Information for crypto-asset users and tax professionals
4. Canada Crypto Tax Guide 2025: Latest CRA Updates
5. Canadian federal government proposes tax amendments
6. Information for crypto-asset users and tax professionals
7. How Are Crypto Losses Taxed in Canada? 2025
8. Prime Minister Carney cancels proposed capital gains tax increase
9. Information for crypto-asset users and tax professionals
10. Capital Gains – 2024
11. Completing Schedule 3
12. Crypto Tax Canada: Expert Guide 2025
13. Information for crypto-asset users and tax professionals

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