Do Tax Rules Apply to Digital Currencies In Canada?
Although Coinsquare cannot and does not provide tax advice, the Government of Canada has said that tax rules apply to digital currency transactions, including those made with cryptocurrencies.
Using digital currency does not exempt consumers from Canadian tax obligations. This means digital currencies are subject to the Income Tax Act.¹
Note that any gains or losses made from digital currencies could be taxable income or capital for the taxpayer.²
Users should consult their own professional tax advisor for advice about the taxation and reporting requirements of the digital currencies they hold
Disclaimer: This does not constitute legal or tax advice. Tax laws and regulations change frequently, and their application can vary widely based on the specific facts and circumstances involved.
Are Digital Currencies a Legal Tender?
The Government of Canada states that digital currencies, such as Bitcoin or other cryptocurrencies, are not legal tender in Canada, as the Canadian dollar is considered the only official currency in Canada. Digital currencies are not supported by any government or central authority, such as the Bank of Canada.³
¹ Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)). Retrieved from the Justice Laws website: http://laws-lois.justice.gc.ca/eng/acts/I-3.3/
² Canada Revenue Agency (2014). What you should know about digital currency. Retrieved from: https://www.canada.ca/en/revenue-agency/news/newsroom/fact-sheets/fact-sheets-2013/what-you-should-know-about-digital-currency.html
³ Financial Consumer Agency of Canada (2017). Digital Currency. Retrieved from: https://www.canada.ca/en/financial-consumer-agency/services/payment/digital-currency.html