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How to report taxes on cryptocurrencies like bitcoin?
July 16, 2026
Cryptocurrencies have become an integral part of our society. Many individuals and businesses around the world have decided to invest in this new asset class. How exactly do cryptocurrencies work, and what are the implications associated with Bitcoin? Here’s what you need to know about cryptocurrencies and their tax implications.
Cryptocurrency is a fully digital currency and payment system. Unlike traditional currencies such as the Canadian dollar or the euro, cryptocurrencies are not regulated by government authorities. It is precisely this characteristic that has contributed to the growing popularity of this new asset class. In addition, this payment system enables highly secure transactions and transfers thanks to advanced encryption. Just like fiat currencies, the value of Bitcoin fluctuates. This cryptocurrency has experienced major crises, such as the one in 2022. Despite this, cryptocurrencies continue to gain popularity around the world.
Since cryptocurrencies differ significantly from fiat currencies, they are also acquired in different ways. Bitcoin and other cryptocurrencies can be acquired in three ways:
Mining is the core operation of the cryptocurrency network. It involves discovering new “coins,” which are then recorded in a large distributed ledger. Each cryptocurrency has a fixed number of coins that can be discovered in this way. To do this, miners configure their hardware and computers to solve highly complex cryptographic puzzles. The first miner to solve the puzzle is rewarded with cryptocurrency.
Cryptocurrencies can also be obtained through trading. It is indeed possible to exchange them for a traditional currency.
Finally, an individual or a business may acquire cryptocurrencies by exchanging them for goods or services. For example, a cryptocurrency may be accepted as payment for goods or services. That’s when tax implications come into play.
In Canada, the tax treatment of cryptocurrencies can vary. Generally speaking, the Canada Revenue Agency does not consider the ownership of cryptocurrencies to be taxable. However, if you engage in transactions classified as “disposals,” certain tax rules may apply and affect your business taxes.
A “disposition” refers to the way you part with something, whether through a sale, transfer, or gift. In the case of cryptocurrencies, certain tax consequences may apply if a business or taxpayer carries out one of these transactions:
If you dispose of cryptocurrencies in any way, you must then determine whether the profit realized is considered income or a capital gain. This step is essential, as income and capital gains are subject to different tax treatments. Each situation must be evaluated on a case-by-case basis. In general, a commercial activity is considered a recurring transaction. However, in certain situations, a one-time transaction may be considered a commercial activity, particularly in the case of risky projects or business-related transactions. It is also important to consider the start date of your activities. This is because funds and assets received while preparing to launch your business are generally not considered income.
Therefore, if your use of cryptocurrencies is related to a business activity, you must include the corresponding profits on your business tax return. Of course, you must convert the amount of these transactions into Canadian dollars. To do this, you must use the exchange rate in effect on the date of the transaction(s) in question. If you paid your employees in cryptocurrency, this also applies to them. They will need to convert the payment amount to CAD on the date they received it to determine their income. As for capital gains, they are generally included in the year’s income. However, only half of the capital gain is taxable.
There’s only one solution: work with accountants who can help you properly assess your situation and who are experts in cryptocurrencies. So don’t hesitate to contact us if you’d like to find an accountant who understands your unique entrepreneurial situation and can guide you through this process. https://www.bankeo.ca/
General information provided for informational purposes only, based on known 2026 tax rules. It is not a substitute for the advice of a Chartered Professional Accountant (CPA): always consult a professional regarding your specific situation.
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