From UFile's tax expert Gerry Vittoratos.
Cryptocurrency is considered a taxable commodity
To the CRA (Canada Revenue Agency), cryptocurrencies such as Bitcoin and Ethereum are treated in the same way as any other commodity, like gold or oil. At its base, profits made from trading commodities are considered a capital gains transaction. Only 50% of the profit would be taxable on your tax return.
Can it be considered business income?
Under certain circumstances, yes. The CRA determines this on a case-by-case basis, but there are common factors that will tip the scale towards business income:
The last two points above lead to another aspect of cryptocurrency income, which is mining for virtual currency like Bitcoin. Mining involves using specialized computers to solve extremely complex computational math problems. Once a problem is solved, the computer receives a block of bitcoins. Activities related to mining would match a lot of the factors mentioned above as being business income.
Cryptocurrency in tax-sheltered accounts
Unfortunately, you cannot own cryptocurrency directly in a tax-sheltered account like an RRSP or a TFSA. What you can own in those accounts are crypto-based Exchange Traded Funds (ETFs) that are backed by cryptocurrencies.
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