how can the CRA justify the demand of tax on crypto if it all happens in virtual space? isnt that the whole point of decentralization? its funny how the same thing dose not apply to stocks.
It's an interesting topic. No one really knows who started bitcoin to begin with. Current governments around the world are trying to put some control over crypto transactions. Stock transactions are also considered taxable income as well. Same tax rules apply as well. As a matter of fact, I think current tax law is a bit more relaxed on crypto as compared to publicly traded stock.
Hi. If I buy crypto for $500 and the value goes up to $550. Is not the $50 just taxable since the initial $500 was my own previously taxed money? Thanks
Hello, thanks for your video . I am Canadian miner. I have a question. If I made 15000$ from mining in 2021, but I spent 10000$ on Gpu and mining equipments. Do I declare those gpu and mining equipments as expense (100%) which means I made 5000$ in 2021. thank you
If you mine, remember that the crypto isn't considered income till you sell them. They are recorded as inventory. If you did sell $15,000 worth of crypto, you are eligible to claim a portion of the mining equipment that you purchase, as well as the extra electricity that you incurred on mining against the income. CRA allows you to claim all capital assets (equipment is considered capital asset) based on the capital cost allowance rate. Likely not 100% of the equipment can be claimed in current year. But a portion of it. Hope this helps.
So in 2021 I bought a ton of poocoins. So if I buy baby doge or mini doge with bnb that's a taxable event?. I'm using Koinly but a lot of it doesn't make sense. I can see in bsc scan I lost 7k in one project yet it thinks I made 24k. How it gets that number I have no idea.
Hi Simon, thanks for being here. Unfortunately this isn't the right platform where I would be able to advise you about your personalized situation. For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca and we will be sure to take care of you. Thanks!
I think you have done a great job explain the principles on how CRA will evaluate if your gains are business income vs capital gains. The example of purchasing a single lump sum of crypto, holding it for a few years, then selling the limp sum is pretty straightforward and would not be classified as "day trading". But most people I know who invest in anything, not just crypto, use a dollar cost averaging (DCA) approach. I someone purchase $100 every month while DCA'ing, I would hope that one selling transaction of the partial amount would not be seen as "day trading" just because there are several trades (buys, sells) done in a year. Do you have any insight regarding how CRA would treat someone using a DCA approach? Thanks for your contribution to our collective understanding.
Dollar cost averaging is a great approach when it comes down to averaging in. Now, averaging in to purchase every month is different from averaging in every day or selling everyday. Again, the area is NOT black and white and it is hard to give you an answer without looking at other factors, such as your professional knowledge, what you do for a living, if you trade a lot, etc.
what if i have 2 crypto accounts, one i hold bitcoin as a long term investment, the other i do short term trading. is it ok to report the income from trading as business income and the other as capital gain?
@@jj-ry8xv I will strongly advice you against self trading, it's really dangerous and had brought so many investors down, you need some one with the knowledge and strategies, someone dedicated to the crypto currency market buisness, and I will strongly recommend expert Mrs Jane Marie
You are deemed to have sold all of your assets when you leave Canada and tax would be calculated/payable on that gain. If you are planning to leave Canada I would recommend that you schedule a meeting with my team to go over the steps to ensure that you know what to expect more fully from leaving Canada.
Thank-you for this video! Wondering about losses... If I sold one crypto that had gains, for another that suffered losses, would I claim the loss? (If so, I'm assuming that could only happen if the depreciated asset was sold, and if it remains invested by the end of the year it would not be considered a loss at all, until if it gets sold the following tax year, or any point in the future)..
Hi there, Thanks for being here! Losses have to be realized losses. And losses can be offset against gains to lower your tax liability. Capital losses can be used to offset against capital gain. Business losess can be offset against employement income, business income and all other income.
Hey Cherry! I have been Binging your content. You're amazing! One question on capital losses with crypto: In the US, an individual can sell a crypto to incur a capital loss, and buy it back immediately without it being a superficial loss, because it's considered property. Does this also apply in Canada, or are users required to wait 30 days to negate it being a superficial loss? Thanks!!
Capital Losses incurred can be offset against capital gain. If you report profit from crypto as business income, then the losses incurred is business losses and can be applied against other income.
Amazing video thank you! I have a question say I mined around 20 Ethereum last year (2021) but I did not sell anything into Canadian CAD fiat/cash. I still hold it to this day. I am assuming I am not allowed to expense my electrical/hardware costs because I did not sell the Ethereum to cash as I have not incurred a taxable event yet? If I sold the 20 Ethereum this year (2022) lets say for $100,000 ($5000 each for example). I would essentially be paying tax capital gain or income tax 100% on the $100,000? Maybe I would fall under Hobby so then it would be capital gains but either way I am fine with it being under a business for income tax then but because I mined those Ethereum back in 2021, I am not allowed to carry forward or input in expenses is that correct? Is there any taxable events for just mining and hodling it for the next 4-5 years for example? Do I need to file anything for the 20 Ethereum I mined in 2021 to CRA if I am simply hodling it? How does Inventory work? Thank you for your time subbed!
Hi, Thanks for reaching out. For any personalized consultation or questions, please contact my office at 416-548-4228 or email at admin@cccpa.ca. It's best to sit down and discuss these delicate matters, as each individuals situation is different and many factors need to be considered.
I have recently found this channel and I must say the content is outstanding, and the production values are very professional and understated. I am now a new subscriber and have been binge watching your videos for a couple of days now.
@RealEstateTaxTips so if I sell my crypto but keep the CAD in my crypto exchange and use the exchanges credit card to make my purchases do I just pay tax on what I'm spending or the whole amount even though it's never left the exchange?
Hello Cherry, thank you for the video. Question: If I buy a Founder's Node with crypto. A Founders' Node is a license made by a crypto company in which I will be performing computation tasks for them in exchange for daily crypto rewards. Can you tell me how I will get taxed for this? Say that the purchasing of the license is roughly $50,000 and then I make $200/day in crypto reward. How will that work?
I am guessing you're doing mining in this case? Depending on whether you're mining as a hobby or mining as a full time business. In your situation, if you do generate $200 a day, chances are, it can be viewed more as generating income from a business. 100% of the reward is taxable but you may also be able to write off at least a portion of the license of $50K, depending on the terms and conditions of the license agreement. I would however, strongly encourage you to speak to someone who knows your situation better. Good luck!
Thank you for the video. I have question about how to report my defi transactions. For example: I deposit my ETH to AAVE, and use it as collateral for borrowing USDC from the platform , then use the USDC for exchanging MATIC; after several days, I exchange the MATIC back to USDC and gain about 1.5x of the original amount, I pay the USDC back to AAVE with interest, and keep the rest. For a workflow like this, which part I should report to CRA for the tax?
Hello quick question, I've purchased some NFT's using Ethereum. Is this considered buying a good? Do I have to pay tax on simply purchasing an NFT or only if I flip it and sell it at a higher price?
The rule of thumb is that if the crypto leaves you, it becomes a taxable event. When you used Ether to pay, the market value at that point become you proceeds from disposition. You can deduct what you pay for Ether to offset and calculate the capital gain. The market value of the Ether would then become the cost of your NFT. When you eventually sell your NFT, this market value of Ether becomes your cost to calculate capital gain.
Thanks for the videos! Let's say I mine bitcoin as a business. When I receive the mining reward in bitcoin, I don't sell it right away; I hold it for a while and sell it later when the price is better. In this case, how should I report my income? should I report the final proceeds (when I finally sold the bitcoin for CAD) as income? for example: when i receive the reward, the bitcoin price is at $20000. but when i sold it for CAD, i sold it at $25000. what if i sold it at $8000 What CCA class should mining equipments belong to? class 50?
Hi Ethan, thanks for your comment. The video does provide the rule of thumb - tax implication is usually triggered when the crypto leaves you... in your example, you will have income of $25K when it is sold. If you sell it for $8K, your income reported is $8K. Hope it helps.
Hi, if you hold the crypto in a platform outside of Canada, I would suggest you to report T1135. If you hold the crypto in a local Canadian platform, I would not think that you need to report T1135. It goes back to where the crypto is stored.
Great video! One question: if we use a company such as Celsius to earn interest (in the form of crypto), basically if I deposit Bitcoin; I get paid in bitcoin weekly from Celsius. I believe it's called staking or yield farming. What are the tax implications? thanks
If you earn bitcoin as "interest" return, you would still need to report that equivalent of interest income into Canadian dollars. Hopefully this helps. The "lending" of your bitcoin however, isn't taxable.
Nice vid. Thank you for the info. I just had one question. If I transfer bitcoin from another Exchange in another counter to my bitbuy account. Would I need pay taxes here in canada as well ??
The rule of thumb is that if the bitcoin leaves you ...in your example, you're transferring it from one account to another without selling, you shouldn't have any tax implication. Unless you are transferring to a RRSP account or corporation account, etc.
Thanks for this. What about trading commission for the cost of acquiring and disposing the crypto. For example bought 1000 dollars of crypto, but had to pay 10.00 dollars to acquire it. Sold the crypto and made $5000 dollars in profit. Cost for selling was 25.00 dollars. So do I report 4965 (5000 - (10+25) as profit?
I don't know your situation enough, but if mining is your own business, and you also trade a lot, then you might have to report it as business income. If you're mining as a hobby and never deduct any business expenses and sounded like you do not trade frequently, the transaction can be recorded as capital gain.
Thanks for the comment. I gotta look up what airdrops is before i can answer your question. In Canada, the rule of thumb of handling taxation on crypto is to based on whether the crypto leaves you (or your wallet or your trading platform) - if it does, it becomes a taxable event. If it doesn't, it's not a taxable event. When you receive the coin, since it isn't leaving you, it isn't a taxable event. When you sell the coin, since it is leaving you, it then becomes a taxable event. Hope it helps.
Let’s say I gained $100k on decentralized exchange and transfer 50% of it in centralized exchange and keep it there for a certain period of time hoping that it will increase overtime. Do I need to report it eventhough I didn’t convert it to Fiat?
What if it takes you 100 transactions to get things settled into the right spots then it's not a business it sits when it gets comfortable so if you have your big chunk sitting and you mess around with 10% or less should be capital gains cuz 90% is sitting but 10% moves almost daily so they can't charge me business on the 90% and if I add some to the 90%. That doesn't mean it's moving as a business that means I'm dollar averaging In
Hi Dale, Thanks for reaching out! I'm glad you find them helpful. For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
Imagine I have three crypto accounts all holding bitcoin. Because the investments in each account were purchased at different times, each holding has a different 'cost basis' (which could be substantially different). Pooled together as my overall bitcoin holdings, there would be a different cost basis than any one account has. If I were to sell from one account would CRA expect me to use the cost basis from that account or the cost basis from my overall bitcoin holdings?
Curious situation: lately Binance closed all accounts for residents of Ontario, when we had to move crypto to another account, does that force us to pay tax?
The rule of thumb is that if the crypto leaves you ...in your situation, you're transferring it from one account to another without selling, you shouldn't have any tax implication. Unless you are transferring to a RRSP account or corporation account, etc.
Remember the general rule of thumb, when the crypto leaves you, the transaction is taxable. This basically means that when you gift the crypto to your friend, you have to report the disposition of your crypto at fair market value at the time of the gifting. Your friend who receives the crypto is not taxed. You're taxed on the gift.
Thank you for the information What if all my withdraws come from crypto loans? I use my crypto as collateral for loans And use that money to buy or pay for stuff
If you still own your crypto, I don't think it is a taxable event. However, the interest on money borrow may not be deductible if you are not using the money for investment purpose.
If I mine it then sell it I have not made any 'profit' as I never had it to start with. Is that correct or are they just saying anything made is capital gain?
If you mine it, and you don't sell, there's no profit because the crypto has not left you. If you mine it, and sell it, selling means your crypto has left you, it's a taxable event, you will have to report the sale and the cost typically is nothing if you mine as a hobby. Full profit is reported as capital gain.
If I bought some crypto currency last year and left it on the platform account. Did not sell or transfer any of it. Do I need to report the details of what I bought? Or I don't need to do anything until I sell them then that's the time I need to report?
You may not have an immediate tax impact, but there's foreign property reporting obligation if your combined total foreign property is over $100K Canadian. If you are holding your Crypto in a platform outside of Canada, it can be considered as a foreign property and thus fall under the reporting obligation.
@@zalenemail I will strongly advice you against self trading, it's really dangerous and had brought so many investors down, you need some one with the knowledge and strategies, someone dedicated to the crypto currency market buisness, and I will strongly recommend expert Mrs Jane Marie
If you are a Canadian tax resident, transferring crypto from one wallet to another is not taxable. If you are transferring your crypto from one country to another, it still isn't taxable but you might have a reporting obligation to report on foreign property ownership.
Great content! Would trasferring BTC from my Bitpay wallet to my Coinbase wallet would be considered a tax trigerred action even though they are both under my name?
again, I would go back to the principle I mentioned in the video. If the BTC never leaves you, then it is still yours and therefore no tax implication. If it leaves you, that's when it triggers tax payable
Great video, really helpful. Also how much is business tax and capital gain tax? If we don't make any profit from exchanging one crypto to another, is the tax still applicable?
Great question. Capital gain is only 50% taxable, the tax that you would have to pay depends on your marginal tax rate. Business trading is 100% taxable, the tax that you would have to pay again depends on the marginal tax bracket you are in. Can be as high as 53.5% in Ontario. If you don't make any profit you would still report the disposal. If there's a loss, you might be able to claim a loss against future gain.
Hi Thank you for clarifying how to deal with crypto tax. What are your fees for filing tax return that includes repirting crypto income / capital gains?
So how about trading crypto, however instead of converting the profit into CAD, I leave it in my crypto wallet for numerous years in hopes that the value continues to go up. Will it be considered income or capital gain once I decide to convert it to fiat?
Without knowing what you do for a living and how often you trade and your background information, it's hard to make a a definitive conclusion. If you are doing long-term buy and hold in the hope of capital appreciation, chances are, when you convert to fiat, profit you make is considered capital gain.
John, the word "trading" typically refers to buying and selling. For those of us who personally buy and hold as investments we don't have any taxable event until we sell or convert one crypto into another. It is important to understand the difference between "trading" and "investing" and which is the appropriate description for your own activity, as there are tax implications. As an investor waiting holding bitcoin & eth long term I will not being paying any tax on any gains until I eventually have a disposition such as exchanging it for a new yacht in 2036! It's worth noting that any crypto profits I have in my TFSA, using investments in bitcoin & eth ETFs, will never be taxed. In 2036 if I cashed that out to buy the yacht I wouldn't need to pay any tax on the gains I had. I love my TFSA!
Hi Dale, Thanks for reaching out! I'm glad you find them helpful. For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
Question if i put in 5 on one thing and 5 on another one thing goes up 2 so I take it out leaving the 5 another one goes down 2 so I leave it then I owe 0 right
Hi Dale, Thanks for reaching out! I'm glad you find them helpful. For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
thanks for the video its amazing....if most of my trading was a loss just trying to compensate what i lost so my tramsactions to reverse the loss can show that am a trader but in fact am in loss
You can always report your loss. Capital losses reported can be carried forward to future years to offset against future capital gains earned. Capital losses can also be carried forward indefinitely until it is applied.
I use an international broker who does the trading on my behalf and sends me the profit. We do this every month. Will this be considered under capital gains, business gains or as dividends? Appreciate your thoughts on this.
If you use a broker that does the trade on your behalf, you likely have more grounds to argue that your trades are on capital account, not income account. However, it also goes back to how often you trade, type of returns you make, etc.
Typically you would not. You do need to keep track of your 'cost basis' so eventually when you do have a disposition you can accurately report to CRA what your capital gain was. Your 'cost basis' changes with every new purchase so if you buy regularly keeping track is more challenging than if you just bought once.
You may not have realized any gain/income. However, if you hold your crypto outside of Canada, you may have a reporting requirement on T1135 on foreign asset.
Who is in Canada investing 200,000 maybe you are talking about China? Because in Canada 3% of the population making above 100,000 a year and 200,000 hardly business people making, so you are saying they will spend nothing for living and food. I think you need to brush up your education?
$200,000 is just an example that I'm using for easy reference. Thanks for your comment. Just for your information - I graduated from University of Waterloo with honors in 2006 with a Bachelor of Mathematics/Chartered Accountancy and Master of Accounting from the same school. Last time I checked, University of Waterloo is still one of the top accounting schools in Canada. I was also on the honor roll when I wrote the Chartered Accountancy exam in the same year, which meant that I was top 10 in Ontario and top 60 in Canada that year. I have since worked at small and medium sized accounting firms as well as Deloitte, which I believe is still one of the top 4 accounting firms in the world. My accounting business works with a few hundred investors. Hopefully that's enough education to do a video on how crypto is being taxed. Good luck and all the best.
@@RealEstateTaxTips Your content is great, no need to explain yourself to negative comments. To the commenter: 200k as an example also doesn't mean someone is investing their whole annual salary. They could be saving for a few years and then investing 200k in savings. Don't be so negative, you might learn something.
Accumulating your Bitcoin and move to El Salvador 🇸🇻 and forget about those Canadian CRA 🇨🇦thief print our wealth 💸 away to infini ⏳.
Do you pay taxes in El Salvador for using or disposing Crypto?
@@joamontio pay your tax in El Salvador 🇸🇻 with BTC 🧠
how can the CRA justify the demand of tax on crypto if it all happens in virtual space? isnt that the whole point of decentralization? its funny how the same thing dose not apply to stocks.
It's an interesting topic. No one really knows who started bitcoin to begin with.
Current governments around the world are trying to put some control over crypto transactions.
Stock transactions are also considered taxable income as well. Same tax rules apply as well. As a matter of fact, I think current tax law is a bit more relaxed on crypto as compared to publicly traded stock.
When you say Sell or Realize Profit, do you mean selling for FIAT coin, or does that include trading for another cryptocurrency?
Hi. If I buy crypto for $500 and the value goes up to $550. Is not the $50 just taxable since the initial $500 was my own previously taxed money? Thanks
Yes, 100%. If you aren't a day trader, then the $50 is taxable as capital gain, only $25 is taxed based on your tax rate.
What if I am using money from another country to buy crypto as a way to send money to Canada??
I love your voice; Any chance you have an ASMR channel as well?
Hello, thanks for your video . I am Canadian miner. I have a question. If I made 15000$ from mining in 2021, but I spent 10000$ on Gpu and mining equipments. Do I declare those gpu and mining equipments as expense (100%) which means I made 5000$ in 2021. thank you
If you mine, remember that the crypto isn't considered income till you sell them. They are recorded as inventory.
If you did sell $15,000 worth of crypto, you are eligible to claim a portion of the mining equipment that you purchase, as well as the extra electricity that you incurred on mining against the income. CRA allows you to claim all capital assets (equipment is considered capital asset) based on the capital cost allowance rate. Likely not 100% of the equipment can be claimed in current year. But a portion of it. Hope this helps.
Such a great camera setup! and great info too! keep up the good work! subed
My videographer definitely appreciates your comment 😄😄
So in 2021 I bought a ton of poocoins. So if I buy baby doge or mini doge with bnb that's a taxable event?. I'm using Koinly but a lot of it doesn't make sense. I can see in bsc scan I lost 7k in one project yet it thinks I made 24k. How it gets that number I have no idea.
Hi Simon, thanks for being here. Unfortunately this isn't the right platform where I would be able to advise you about your personalized situation. For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca and we will be sure to take care of you. Thanks!
Thank you for this beneficial video.
If I buy and hold crypto every week, would they consider it a business?
if you buy and hold - no selling or transferring, then it is not a business... but if you buy, sell, every week, they may consider it as a business.
If you receive usdt as a gift, do you pay taxes or declare it? What’s the minimum amount and frequency you can receive per year?
If you are receiving the gift and not for a service that you perform or a product that you sell, then technically there's no tax.
I think you have done a great job explain the principles on how CRA will evaluate if your gains are business income vs capital gains. The example of purchasing a single lump sum of crypto, holding it for a few years, then selling the limp sum is pretty straightforward and would not be classified as "day trading". But most people I know who invest in anything, not just crypto, use a dollar cost averaging (DCA) approach. I someone purchase $100 every month while DCA'ing, I would hope that one selling transaction of the partial amount would not be seen as "day trading" just because there are several trades (buys, sells) done in a year. Do you have any insight regarding how CRA would treat someone using a DCA approach? Thanks for your contribution to our collective understanding.
Dollar cost averaging is a great approach when it comes down to averaging in. Now, averaging in to purchase every month is different from averaging in every day or selling everyday. Again, the area is NOT black and white and it is hard to give you an answer without looking at other factors, such as your professional knowledge, what you do for a living, if you trade a lot, etc.
what if i have 2 crypto accounts, one i hold bitcoin as a long term investment, the other i do short term trading. is it ok to report the income from trading as business income and the other as capital gain?
Absolutely. Having two accounts is the key.
@@RealEstateTaxTips thanks for the assurance! I believe this principle also applied to stock investments?
@@jj-ry8xv I will strongly advice you against self
trading, it's really dangerous and had
brought so many investors down, you need
some one with the knowledge and
strategies, someone dedicated to the
crypto currency market buisness, and I will
strongly recommend expert Mrs Jane Marie
꧁༒☬෴十𝟰𝟰𝟕8𝟔8𝟕𝟏𝟎𝟏𝟓𝟏෴☬༒꧂
hi how many months before i need to leave canada permanently and become non tax resident before selliing my crypto. thanks in advance.
You are deemed to have sold all of your assets when you leave Canada and tax would be calculated/payable on that gain. If you are planning to leave Canada I would recommend that you schedule a meeting with my team to go over the steps to ensure that you know what to expect more fully from leaving Canada.
Thank-you for this video!
Wondering about losses...
If I sold one crypto that had gains, for another that suffered losses, would I claim the loss? (If so, I'm assuming that could only happen if the depreciated asset was sold, and if it remains invested by the end of the year it would not be considered a loss at all, until if it gets sold the following tax year, or any point in the future)..
Hi there, Thanks for being here!
Losses have to be realized losses. And losses can be offset against gains to lower your tax liability.
Capital losses can be used to offset against capital gain. Business losess can be offset against employement income, business income and all other income.
What are the tax implications of receiving free crypto from games, watching videos, and exchanges?
Receiving crypto as a result of conducting a business is taxable. Receiving crypto as a gift isn't taxable.
Hey Cherry! I have been Binging your content. You're amazing!
One question on capital losses with crypto:
In the US, an individual can sell a crypto to incur a capital loss, and buy it back immediately without it being a superficial loss, because it's considered property. Does this also apply in Canada, or are users required to wait 30 days to negate it being a superficial loss?
Thanks!!
You talked about gain. What about loss? Lol
Capital Losses incurred can be offset against capital gain. If you report profit from crypto as business income, then the losses incurred is business losses and can be applied against other income.
Amazing video thank you! I have a question say I mined around 20 Ethereum last year (2021) but I did not sell anything into Canadian CAD fiat/cash. I still hold it to this day.
I am assuming I am not allowed to expense my electrical/hardware costs because I did not sell the Ethereum to cash as I have not incurred a taxable event yet?
If I sold the 20 Ethereum this year (2022) lets say for $100,000 ($5000 each for example). I would essentially be paying tax capital gain or income tax 100% on the $100,000? Maybe I would fall under Hobby so then it would be capital gains but either way I am fine with it being under a business for income tax then but because I mined those Ethereum back in 2021, I am not allowed to carry forward or input in expenses is that correct?
Is there any taxable events for just mining and hodling it for the next 4-5 years for example?
Do I need to file anything for the 20 Ethereum I mined in 2021 to CRA if I am simply hodling it? How does Inventory work?
Thank you for your time subbed!
Hi,
Thanks for reaching out. For any personalized consultation or questions, please contact my office at 416-548-4228 or email at admin@cccpa.ca. It's best to sit down and discuss these delicate matters, as each individuals situation is different and many factors need to be considered.
I'd rather use a reputable exchange that keeps track of all my transactions, and just include the tax form they provide with my tax return.
Absolutely. Some crypto platform just disappeared and closed off too.
So reputable exchanges DO provide a tax form (or summary of transactions) for our tax purposes?
@@MsSimplysandy Yes, IBKR does. But they have no crypto markets in Canada, only crypto derivatives such as BITO and MBT.
I have recently found this channel and I must say the content is outstanding, and the production values are very professional and understated. I am now a new subscriber and have been binge watching your videos for a couple of days now.
So glad you find it helpful!
@RealEstateTaxTips so if I sell my crypto but keep the CAD in my crypto exchange and use the exchanges credit card to make my purchases do I just pay tax on what I'm spending or the whole amount even though it's never left the exchange?
Hello Cherry, thank you for the video.
Question: If I buy a Founder's Node with crypto. A Founders' Node is a license made by a crypto company in which I will be performing computation tasks for them in exchange for daily crypto rewards.
Can you tell me how I will get taxed for this?
Say that the purchasing of the license is roughly $50,000 and then I make $200/day in crypto reward.
How will that work?
I am guessing you're doing mining in this case? Depending on whether you're mining as a hobby or mining as a full time business. In your situation, if you do generate $200 a day, chances are, it can be viewed more as generating income from a business. 100% of the reward is taxable but you may also be able to write off at least a portion of the license of $50K, depending on the terms and conditions of the license agreement.
I would however, strongly encourage you to speak to someone who knows your situation better. Good luck!
Thank you for the video. I have question about how to report my defi transactions. For example: I deposit my ETH to AAVE, and use it as collateral for borrowing USDC from the platform , then use the USDC for exchanging MATIC; after several days, I exchange the MATIC back to USDC and gain about 1.5x of the original amount, I pay the USDC back to AAVE with interest, and keep the rest. For a workflow like this, which part I should report to CRA for the tax?
Hi Leo, Thanks for reaching out!
For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
Hello quick question, I've purchased some NFT's using Ethereum. Is this considered buying a good? Do I have to pay tax on simply purchasing an NFT or only if I flip it and sell it at a higher price?
The rule of thumb is that if the crypto leaves you, it becomes a taxable event.
When you used Ether to pay, the market value at that point become you proceeds from disposition. You can deduct what you pay for Ether to offset and calculate the capital gain.
The market value of the Ether would then become the cost of your NFT. When you eventually sell your NFT, this market value of Ether becomes your cost to calculate capital gain.
Thanks for the videos!
Let's say I mine bitcoin as a business. When I receive the mining reward in bitcoin, I don't sell it right away; I hold it for a while and sell it later when the price is better. In this case, how should I report my income? should I report the final proceeds (when I finally sold the bitcoin for CAD) as income?
for example: when i receive the reward, the bitcoin price is at $20000. but when i sold it for CAD, i sold it at $25000. what if i sold it at $8000
What CCA class should mining equipments belong to? class 50?
Hi Ethan, thanks for your comment. The video does provide the rule of thumb - tax implication is usually triggered when the crypto leaves you... in your example, you will have income of $25K when it is sold.
If you sell it for $8K, your income reported is $8K.
Hope it helps.
Is a T1135 form required for crypto with cost-base over $100K? (ie. is crypto considered foreign from a Canadian perspective)
Hi, if you hold the crypto in a platform outside of Canada, I would suggest you to report T1135.
If you hold the crypto in a local Canadian platform, I would not think that you need to report T1135.
It goes back to where the crypto is stored.
Great video! One question: if we use a company such as Celsius to earn interest (in the form of crypto), basically if I deposit Bitcoin; I get paid in bitcoin weekly from Celsius. I believe it's called staking or yield farming. What are the tax implications? thanks
If you earn bitcoin as "interest" return, you would still need to report that equivalent of interest income into Canadian dollars. Hopefully this helps.
The "lending" of your bitcoin however, isn't taxable.
Nice vid. Thank you for the info. I just had one question. If I transfer bitcoin from another Exchange in another counter to my bitbuy account. Would I need pay taxes here in canada as well ??
The rule of thumb is that if the bitcoin leaves you ...in your example, you're transferring it from one account to another without selling, you shouldn't have any tax implication. Unless you are transferring to a RRSP account or corporation account, etc.
Thanks for this. What about trading commission for the cost of acquiring and disposing the crypto. For example bought 1000 dollars of crypto, but had to pay 10.00 dollars to acquire it. Sold the crypto and made $5000 dollars in profit. Cost for selling was 25.00 dollars. So do I report 4965 (5000 - (10+25) as profit?
Typically, trading commissions and fees are also tax deductible.
In 2018 I mined then didn't sell any. Now in 2021 I sold around 5k to buy Gpu. Is that business or capital gain?
I don't know your situation enough, but if mining is your own business, and you also trade a lot, then you might have to report it as business income. If you're mining as a hobby and never deduct any business expenses and sounded like you do not trade frequently, the transaction can be recorded as capital gain.
So far the best video on the cryptos!! Thanks for the information. But I was wondering how should we handle cryto airdrops regarding taxes?
Thanks for the comment. I gotta look up what airdrops is before i can answer your question.
In Canada, the rule of thumb of handling taxation on crypto is to based on whether the crypto leaves you (or your wallet or your trading platform) - if it does, it becomes a taxable event. If it doesn't, it's not a taxable event.
When you receive the coin, since it isn't leaving you, it isn't a taxable event.
When you sell the coin, since it is leaving you, it then becomes a taxable event.
Hope it helps.
Let’s say I gained $100k on decentralized exchange and transfer 50% of it in centralized exchange and keep it there for a certain period of time hoping that it will increase overtime. Do I need to report it eventhough I didn’t convert it to Fiat?
Going back to the rule of thumb - if the crypto is leaving you (leaving your platform/your wallet), it becomes a taxable event.
What if it takes you 100 transactions to get things settled into the right spots then it's not a business it sits when it gets comfortable so if you have your big chunk sitting and you mess around with 10% or less should be capital gains cuz 90% is sitting but 10% moves almost daily so they can't charge me business on the 90% and if I add some to the 90%. That doesn't mean it's moving as a business that means I'm dollar averaging In
Hi Dale,
Thanks for reaching out! I'm glad you find them helpful.
For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
Imagine I have three crypto accounts all holding bitcoin. Because the investments in each account were purchased at different times, each holding has a different 'cost basis' (which could be substantially different). Pooled together as my overall bitcoin holdings, there would be a different cost basis than any one account has. If I were to sell from one account would CRA expect me to use the cost basis from that account or the cost basis from my overall bitcoin holdings?
Great question. Average cost per bitcoin is used to calculate capital gain.
What if we receive crypto from staking? Do we only report the capital gain or loss if we choose to sell that crypto received from staking?
Hi, Thanks for reaching out!
For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
Have u heard of the compsnt Paraiba a plstform for crypto and real estate
Thank you
Great information
No not really. I have only heard of the commonly used one. Crypto.com, Bitbuy, WealthSimple.
Great video, great info 👍 👌
Glad it was helpful!
Curious situation: lately Binance closed all accounts for residents of Ontario, when we had to move crypto to another account, does that force us to pay tax?
The rule of thumb is that if the crypto leaves you ...in your situation, you're transferring it from one account to another without selling, you shouldn't have any tax implication. Unless you are transferring to a RRSP account or corporation account, etc.
How about if you are gifting your crypto to a friend by transferring your crypto to their wallet? How does CRA know what's a gift and what is not?
Remember the general rule of thumb, when the crypto leaves you, the transaction is taxable.
This basically means that when you gift the crypto to your friend, you have to report the disposition of your crypto at fair market value at the time of the gifting.
Your friend who receives the crypto is not taxed.
You're taxed on the gift.
Thanks for information. God bless you
Thank you for the information
What if all my withdraws come from crypto loans?
I use my crypto as collateral for loans
And use that money to buy or pay for stuff
If you still own your crypto, I don't think it is a taxable event. However, the interest on money borrow may not be deductible if you are not using the money for investment purpose.
If I mine it then sell it I have not made any 'profit' as I never had it to start with. Is that correct or are they just saying anything made is capital gain?
If you mine it, and you don't sell, there's no profit because the crypto has not left you.
If you mine it, and sell it, selling means your crypto has left you, it's a taxable event, you will have to report the sale and the cost typically is nothing if you mine as a hobby. Full profit is reported as capital gain.
If I bought some crypto currency last year and left it on the platform account. Did not sell or transfer any of it. Do I need to report the details of what I bought? Or I don't need to do anything until I sell them then that's the time I need to report?
You may not have an immediate tax impact, but there's foreign property reporting obligation if your combined total foreign property is over $100K Canadian.
If you are holding your Crypto in a platform outside of Canada, it can be considered as a foreign property and thus fall under the reporting obligation.
@@RealEstateTaxTips the platform is in Canada. Thanks for your reply !
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Nice content. What if I transfer my crypto from one wallet to another still in my name, even when from one country to another?
If you are a Canadian tax resident, transferring crypto from one wallet to another is not taxable.
If you are transferring your crypto from one country to another, it still isn't taxable but you might have a reporting obligation to report on foreign property ownership.
Great content!
Would trasferring BTC from my Bitpay wallet to my Coinbase wallet would be considered a tax trigerred action even though they are both under my name?
again, I would go back to the principle I mentioned in the video. If the BTC never leaves you, then it is still yours and therefore no tax implication. If it leaves you, that's when it triggers tax payable
@@RealEstateTaxTips awesome, thanks for your reply!
Great video, really helpful. Also how much is business tax and capital gain tax? If we don't make any profit from exchanging one crypto to another, is the tax still applicable?
Great question. Capital gain is only 50% taxable, the tax that you would have to pay depends on your marginal tax rate. Business trading is 100% taxable, the tax that you would have to pay again depends on the marginal tax bracket you are in. Can be as high as 53.5% in Ontario.
If you don't make any profit you would still report the disposal. If there's a loss, you might be able to claim a loss against future gain.
Hi
Thank you for clarifying how to deal with crypto tax.
What are your fees for filing tax return that includes repirting crypto income / capital gains?
Hi John, feel free to email our office at admin@cccpa.ca or call us at 416-548-4228.
So how about trading crypto, however instead of converting the profit into CAD, I leave it in my crypto wallet for numerous years in hopes that the value continues to go up. Will it be considered income or capital gain once I decide to convert it to fiat?
Without knowing what you do for a living and how often you trade and your background information, it's hard to make a a definitive conclusion. If you are doing long-term buy and hold in the hope of capital appreciation, chances are, when you convert to fiat, profit you make is considered capital gain.
John, the word "trading" typically refers to buying and selling. For those of us who personally buy and hold as investments we don't have any taxable event until we sell or convert one crypto into another. It is important to understand the difference between "trading" and "investing" and which is the appropriate description for your own activity, as there are tax implications. As an investor waiting holding bitcoin & eth long term I will not being paying any tax on any gains until I eventually have a disposition such as exchanging it for a new yacht in 2036! It's worth noting that any crypto profits I have in my TFSA, using investments in bitcoin & eth ETFs, will never be taxed. In 2036 if I cashed that out to buy the yacht I wouldn't need to pay any tax on the gains I had. I love my TFSA!
Do they break down every transaction so I need an expensive accountant
Hi Dale,
Thanks for reaching out! I'm glad you find them helpful.
For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
Question if i put in 5 on one thing and 5 on another one thing goes up 2 so I take it out leaving the 5 another one goes down 2 so I leave it then I owe 0 right
Hi Dale,
Thanks for reaching out! I'm glad you find them helpful.
For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
thanks for the video its amazing....if most of my trading was a loss just trying to compensate what i lost so my tramsactions to reverse the loss can show that am a trader but in fact am in loss
You can always report your loss. Capital losses reported can be carried forward to future years to offset against future capital gains earned. Capital losses can also be carried forward indefinitely until it is applied.
Nice video with practical info.
Glad you find it useful
I use an international broker who does the trading on my behalf and sends me the profit. We do this every month. Will this be considered under capital gains, business gains or as dividends? Appreciate your thoughts on this.
If you use a broker that does the trade on your behalf, you likely have more grounds to argue that your trades are on capital account, not income account. However, it also goes back to how often you trade, type of returns you make, etc.
@@RealEstateTaxTips thank you!
What If I only buy and hold on to it for long term, do I still have to report to cra every year?
Typically you would not. You do need to keep track of your 'cost basis' so eventually when you do have a disposition you can accurately report to CRA what your capital gain was. Your 'cost basis' changes with every new purchase so if you buy regularly keeping track is more challenging than if you just bought once.
You may not have realized any gain/income. However, if you hold your crypto outside of Canada, you may have a reporting requirement on T1135 on foreign asset.
Who is in Canada investing 200,000 maybe you are talking about China? Because in Canada 3% of the population making above 100,000 a year and 200,000 hardly business people making, so you are saying they will spend nothing for living and food. I think you need to brush up your education?
$200,000 is just an example that I'm using for easy reference.
Thanks for your comment. Just for your information -
I graduated from University of Waterloo with honors in 2006 with a Bachelor of Mathematics/Chartered Accountancy and Master of Accounting from the same school. Last time I checked, University of Waterloo is still one of the top accounting schools in Canada. I was also on the honor roll when I wrote the Chartered Accountancy exam in the same year, which meant that I was top 10 in Ontario and top 60 in Canada that year.
I have since worked at small and medium sized accounting firms as well as Deloitte, which I believe is still one of the top 4 accounting firms in the world.
My accounting business works with a few hundred investors.
Hopefully that's enough education to do a video on how crypto is being taxed.
Good luck and all the best.
@@RealEstateTaxTips Your content is great, no need to explain yourself to negative comments.
To the commenter: 200k as an example also doesn't mean someone is investing their whole annual salary. They could be saving for a few years and then investing 200k in savings. Don't be so negative, you might learn something.