CRA Crypto-Asset Reporting: Who Qualifies and What You Get
Learn how crypto-asset reporting works in Canada and how to distinguish between capital gains and business income for your digital assets.
This reporting framework provides guidance on how to treat income and gains made from cryptocurrency transactions for tax purposes.
Who it's for
This applies to anyone who trades or earns income through crypto-assets.
What you get
The framework provides a clear way to determine whether your crypto activity should be classified as capital gains or business income. Capital gains refer to the profit made when you sell an asset for more than you paid for it, while business income is what you earn from active trading.
What it costs you
To comply, you must maintain meticulous records of every single transaction you make. You will need to track details like the adjusted cost base, which is the average cost of your assets, to ensure your reporting is accurate.
The catch to know
If you have a very high volume of trades, auditors might mistake your capital gains for business income. This distinction is important because it changes how your earnings are taxed.
How to apply
- Keep a detailed log of every digital asset purchase and sale.
- Calculate your adjusted cost base for all holdings.
- Determine if your activity frequency qualifies as a business or an investment.
- Report your findings through your standard tax filings.