- Crypto ETFs hold real crypto, so they are a more direct way to get exposure to crypto compared to shares in a public company that does crypto operations.
- Crypto ETFs are eligible for tax-advantaged accounts such as a tax-free savings account (TFSA), registered retirement savings plan (RRSP) and first home savings account (FHSA). (More on crypto and taxes below.)
It’s tax season—here’s what you need to know
The Canada Revenue Agency (CRA) considers cryptocurrencies as assets, the purchase and sale of which can result in significant profit or loss. As a result, if you sell crypto in 2024, you may owe capital gains tax or have a capital loss that you can use to pay off other loan benefits.
Here’s how capital gains tax works in Canada, including crypto: 50% of capital gains are added to your income and taxed at your marginal tax rate. Read MoneySense’s guide to crypto taxes in Canada, and my article about crypto ETF taxes in Canada.
Here’s an example: Let’s say you bought 1 bitcoin for $62,722 on Jan 8, 2024, and sold it for $144,733 on Dec. 14, 2024. You will owe $12,301.65 in capital gains tax. Here is the equation:
Trudeau resigns—leading to uncertainty over capital gains tax
Calculating your capital gains tax can be pretty straightforward as long as you have records of everything you’ve done. However, if you have a net worth of more than $250,000, things can get even more complicated.
If your capital gains are more than $250,000, your inclusion rate for gains over $250,000 is two-thirds (66.67%). Although this higher rate was introduced in 2024, there is still uncertainty as to how and when it will be implemented in 2025 and beyond.
Why? Capital gains tax reforms had not yet been passed into law when Prime Minister Justin Trudeau announced his resignation and prorogued Parliament until March. However, the Department of Finance said that during the review period, the CRA will continue to administer the reforms. Here’s what we know so far about the capital gains tax changes under consideration.
Crypto price fluctuations are common
The prices of bitcoin, ethereum and other cryptocurrencies are speculative and subject to large fluctuations. Although the long-term trend of crypto appears to be strong, investors should remember that deep and sudden bear markets are part of crypto history—and should be expected in the future.
As always, be careful and only consider crypto if it fits your financial goals, time horizon and risk profile. Invest as much money as you are willing to lose, and keep an eye out for crypto scams.
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