Called the CRA (Canadian tax revenue agency...)...

[megashira1]

After many hours searching online, you do have to pay taxes on EVERY trade you made profit with!! Trading, for example, BTC for ETH is the same as trading BTC to CAD and CAD to ETH. You have to pay the tax on capital gain for the BTC "sell". For now i'm not sure of the method that is recommend in Canada to determine the initial value of the BTC used to buy the ETC if you have bought/acquire BTC over the time at different prices. I have found 3 ways to do this. The First In First Out, the Last In Last Out and the average buy price. I'm not sure which one to use in Canada ... For tax, capital gain is taxes at your marginal rate for half the amount of gain which is calculate with a simple formula : Sell price minus fees MINUS Buy price with fees = Capital gain. Be aware that a person buying and holding for more than a year is consider a long time trader and the income is a capital gain. For those who trades (buy and sell) inside a single year, they can be flag as "professional trader" and the profit made on each trade is becoming like a job income and is all tax at your marginal rate!!

And now the disclaimer, I'm just a small trader and i'm not a financial/accountant professional in anyway, my personnal advise is if you want to be save, declare your income, pay your tax and keep proof of your trades as sign of good will. That way you will keep CRA far from you even if they ask you proof, send them and you will never hear from them again. To be sure always ask for professionnal help (wich is really hard to get for something virtual like bitcoin)!

Enjoy!

Edit : Here a link for a PDF made by 2 professionnal
Olivier Fournier. Deloitte Tax Law ll p, Montreal. Frequent
speaker, writer, and presenter at tax conferences and seminars.

John J. Lennard. Davies Ward Phillips & Vineberg ll p,
Montreal. bcomm (2007) Laurentian University; bcl , ll b
(2011) McGill University.

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&ved=0ahUKEwj8n867y-vVAhVGLSYKHR5qCH0QFgheMAc&url=https%3A%2F%2Fwww.dwpv.com%2Fassets%2F-%2Fmedia%2FF28E60C148DB463DB31E0CF66008FD2A.ashx&usg=AFQjCNE-1eNUL1Mt0Kv2W7a6nhr-jyfOnQ

"For those who trades (buy and sell) inside a single year, they can be flag as "professional trader" and the profit made on each trade is becoming like a job income and is all tax at your marginal rate!!"

Any more information regarding the definition of a professional trader? I'm sure most people within the crypto space have made trades at one time or another (just look at the trading volumes).

Does this make almost everyone within the crypto space a professional trader as per the CRA?

If people knew you would get tax'd at your marginal rate and not at the capital gains rate i'm sure many would not engage in trading to begin with.

If the CRA see's you invested into 10 Bitcoins in 2013 and now cashout 20 Bitcoins, and you show evidence that you engaged in trading to increase your total Bitcoins, does this guarantee you to be nabbed as a trader? What if you made only 1 trade? 10 trades? 100 trades?

Also, what if one has incomplete records regarding their crypto history but it is obvious that they made $ either by gambling, trading, donations et al and they now want to cash out?

[BCMB]

After many hours searching online, you do have to pay taxes on EVERY trade you made profit with!! Trading, for example, BTC for ETH is the same as trading BTC to CAD and CAD to ETH. You have to pay the tax on capital gain for the BTC "sell". For now i'm not sure of the method that is recommend in Canada to determine the initial value of the BTC used to buy the ETC if you have bought/acquire BTC over the time at different prices. I have found 3 ways to do this. The First In First Out, the Last In Last Out and the average buy price. I'm not sure which one to use in Canada ... For tax, capital gain is taxes at your marginal rate for half the amount of gain which is calculate with a simple formula : Sell price minus fees MINUS Buy price with fees = Capital gain. Be aware that a person buying and holding for more than a year is consider a long time trader and the income is a capital gain. For those who trades (buy and sell) inside a single year, they can be flag as "professional trader" and the profit made on each trade is becoming like a job income and is all tax at your marginal rate!!

And now the disclaimer, I'm just a small trader and i'm not a financial/accountant professional in anyway, my personnal advise is if you want to be save, declare your income, pay your tax and keep proof of your trades as sign of good will. That way you will keep CRA far from you even if they ask you proof, send them and you will never hear from them again. To be sure always ask for professionnal help (wich is really hard to get for something virtual like bitcoin)!

Enjoy!

Edit : Here a link for a PDF made by 2 professionnal
Olivier Fournier. Deloitte Tax Law ll p, Montreal. Frequent
speaker, writer, and presenter at tax conferences and seminars.

John J. Lennard. Davies Ward Phillips & Vineberg ll p,
Montreal. bcomm (2007) Laurentian University; bcl , ll b
(2011) McGill University.

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&ved=0ahUKEwj8n867y-vVAhVGLSYKHR5qCH0QFgheMAc&url=https%3A%2F%2Fwww.dwpv.com%2Fassets%2F-%2Fmedia%2FF28E60C148DB463DB31E0CF66008FD2A.ashx&usg=AFQjCNE-1eNUL1Mt0Kv2W7a6nhr-jyfOnQ

"For those who trades (buy and sell) inside a single year, they can be flag as "professional trader" and the profit made on each trade is becoming like a job income and is all tax at your marginal rate!!"

Any more information regarding the definition of a professional trader? I'm sure most people within the crypto space have made trades at one time or another (just look at the trading volumes).

Does this make almost everyone within the crypto space a professional trader as per the CRA?

If people knew you would get tax'd at your marginal rate and not at the capital gains rate i'm sure many would not engage in trading to begin with.

If the CRA see's you invested into 10 Bitcoins in 2013 and now cashout 20 Bitcoins, and you show evidence that you engaged in trading to increase your total Bitcoins, does this guarantee you to be nabbed as a trader? What if you made only 1 trade? 10 trades? 100 trades?

Also, what if one has incomplete records regarding their crypto history but it is obvious that they made $ either by gambling, trading, donations et al and they now want to cash out?

I would be curious to hear from someone who has been flagged as a professional trader by the CRA unknowingly. I know this can be an issue with frequent trades made inside tax sheltered accounts such as a TFSA as well (where there would normally be no tax). It seems like the guidelines around this are verrrrry vague. I wouldn't be surprised if just a few buy/sells per day would get you flagged.

[megashira1]

Also, what if you have been trading cryptos and THEN hold for 1 year after your last trade? Would it be deemed capital gains or income?

[BCMB]

Also, what if you have been trading cryptos and THEN hold for 1 year after your last trade? Would it be deemed capital gains or income?

I think it would largely depend on if you ever transferred to CAD/USD during that time.

[megashira1]

Also, what if you have been trading cryptos and THEN hold for 1 year after your last trade? Would it be deemed capital gains or income?

I think it would largely depend on if you ever transferred to CAD/USD during that time.

After re-reading Melfear's post, I'd be paying tax on my gains made through trading at my marginal tax rate. If I then hold those coins for 1 year after my last trade those subsequent gains would be taxed at the capital gains rate.

Most people don't believe you have to pay tax on trading until you solidify your gains into fiat, and that those gains will be taxed as capital gains not income. This is not true.

fyi being taxed as income as opposed to capital gains is double the amount of tax on your earnings. So much for easy crypto profits.

With this in mind a lot of speculative plays are no longer as appealing given the newly understand risk:reward ratio

[BCMB]

Also, what if you have been trading cryptos and THEN hold for 1 year after your last trade? Would it be deemed capital gains or income?

I think it would largely depend on if you ever transferred to CAD/USD during that time.

After re-reading Melfear's post, I'd be paying tax on my gains made through trading at my marginal tax rate. If I then hold those coins for 1 year after my last trade those subsequent gains would be taxed at the capital gains rate.

Most people don't believe you have to pay tax on trading until you solidify your gains into fiat, and that those gains will be taxed as capital gains not income. This is not true.

fyi being taxed as income as opposed to capital gains is double the amount of tax on your earnings. So much for easy crypto profits.

With this in mind a lot of speculative plays are no longer as appealing given the newly understand risk:reward ratio

I think a large part of the belief that you don't pay tax on gains until you transfer to fiat is that it is going to be much, much more difficult for a governing body to actually track your trades between alt coins, at least for the near future. The CRA isn't going to know about your trades on Bittrex, but you can bet they will be notified when you cash out of Quadriga. I wonder what would happen if you claimed you doubled your BTC via gambling, but had no proof?

[Clamking33]

Hi

Just saw this and it seems there's a lot of disagreement and there should and will be for obvious reasons.  I just wanted to add my 2 cents about the cra.

U do not have to report bitcoin or cash if you are not depositing it into a bank.  I actually just got finished my year of frozen bank accounts and credit cards dealing with the cra.  Ur chances of winning against them let's just say are slim to none of course there are rare cases.

That being said if u cash your bit coin where are you going to keep your cash under a pillow hidden.  This is actually what a lot of people do with large amounts of cash.  The rule of thumb in Canada used to be any deposit that is equal to or over 10000 dollars has to be reported to fintrac.  I think they changed this law this year and now banks have to notify the cra deposit in cash over 3 thousand dollars if they deem it suspicious what ever this means.  I'm not 100percent sure of my last statement but I believe during my research last year I read it. 
That being said even if reported if it is from bitcoin I'm not sure what they will or can do.  This is probably a case by case thing with the cra what ever they do it will probably be a lengthy headache for the person depositing the cash.  The only way a large sum transaction isn't reported is if it's from a public body
Ie. The government municipality hospital etc. Or a financial institution like a bank.
After reporting to the cra it doesn't mean they will act but when it comes to tax time you never know what will happen.  Believe me I went through a year of suffering. So in conclusion I believe the question about taxing bitcoin is legitimate if you decide to put the cash or check into a bank

Edit
For any confusion my account wasn't frozen due to bitcoin but I have been trading crypto for years and making a living off of it.  I also won money at a couple casinos and had a import export business with large wire transactions going in and out.  They audited me said I owed 68000 dollars.  Which was ridiculous so I had to deal with the cra.  U definitely do not want to get audited.  They audited me 3 more times after because I sent them legitimate paperwork and got accountants involved. How ever this took a year and the cra switched there's collection agent on me 5 times and each time I had to report the exact same thing over and over this process took a year and my final owing being less than 3000 dollars and my credit in shambles due to not being able to make any credit card payments or use a bank.  So yes if u have bitcoin and plan on cashing them in MAKE SURE you do some research contact an accountant and the cra. I plan on cashing some bitcoin in soon but honestly I'm freaking hesitant lol. When you ask the cra they may not know a thing about bit coin but when time comes and the agent that didn't know a thing about bitcoin sees a large sum of money in an account what do you think the government will do.  Hmm this guy has a lump some of money not reported if it's taxable we need to take as much a we can now the agent with little knowledge gets booted off the case and in comes the government of Canada...whether they know nothing or something about bitcoin doesn't matter at this point.  Chances are even if you are able to keep all your money your gonna have to do a bunch of things that you more than likely don't want to do because you shouldn't have too but that's the way it goes

[Sandwichstealer]

It’s my understanding that bitcoin is considered a property. If you’re familiar with trading stocks use the same rules and tax forms.

Keep a record of all transactions. Record the fiat equivalent value.

If you make interest, report the interest every year. It will be taxed at your highest tax rate.

Declare capital gains and capital losses. If you take a loss, take advantage of that loss! Capital calculations are made at the time of sale.

When you purchase or sell a stock the record indicates number of units and share price. Bitcoin transaction records should be the same.

If you have a record of 2 purchased units, make sure you have a record of 2 sold units to balance the books.

I’m not an accountant but you should ask one first. You might get audited, have the documentation to back it up.

[alphabetacanary]

I don't understand why would you want to pay tax on Bitcoin? First of all its not Canada currency. Two there no rule that says you need to pay your tax on btc. It's decentralised for a reason and no country can charge a tax in it until they have a valid law. You should call a law firm and ask did Canada over night make a law to charge tax on Bitcoin, you seem so panicky may I know why. All this time you would have traded without fear. So why wake up suddenly?

Wow.  This ignorance is amazing.  There absolutely are rules about BTC and taxation.  Both capital gains tax laws and income tax laws apply to bitcoin. 

If you do a job for me, there is nothing stopping me from paying you in chickens.  You renovate my bathroom, I give you chickens in return.  Now, according to your logic, chickens are not Canadian currency and therefore aren't subject to tax.  Wrong.  The rules are very clear and always have been.  You must declare those chickens at fair market value are the time you received them as income AND PAY INCOME TAX.  The same goes for BTC.

Similarly, buying/selling BTC? They are treated as a commodity and subject to capital gains tax or you can submit loss claims. You may not AGREE with those rules, but they are there and always have been.  If you don't follow them, that makes you a TAX EVADER. History shows tax evasion does not end well for those who get caught. 

https://www.canada.ca/en/revenue-agency/news/newsroom/fact-sheets/fact-sheets-2015/what-you-should-know-about-digital-currency.html

I am positive the CRA is quietly amassing large amounts of data on transactions to Canadians from the exchanges and will make an example out of the people who think they can buy/sell BTC without paying their taxes.  Ignorance will not be a defence.

[megashira1]

Anyone have experience cashing out? How did you report your gains?

[markeee]

Regarding Fintrac, it's basically amounts of $10k only. That's the magic number. Best to keep it under and no red flags appear I guess...

More details here: http://www.fintrac-canafe.gc.ca/reporting-declaration/rpt-eng.asp

I wonder how we report our mining cryptocurrencies. I mine with NiceHash and collect BTC. Sigh.... I hate the fact the CRA remains vague, but can still hold us accountable.... yet you can't get clear instructions to follow.

 

Hi

Just saw this and it seems there's a lot of disagreement and there should and will be for obvious reasons.  I just wanted to add my 2 cents about the cra.

U do not have to report bitcoin or cash if you are not depositing it into a bank.  I actually just got finished my year of frozen bank accounts and credit cards dealing with the cra.  Ur chances of winning against them let's just say are slim to none of course there are rare cases.

That being said if u cash your bit coin where are you going to keep your cash under a pillow hidden.  This is actually what a lot of people do with large amounts of cash.  The rule of thumb in Canada used to be any deposit that is equal to or over 10000 dollars has to be reported to fintrac.  I think they changed this law this year and now banks have to notify the cra deposit in cash over 3 thousand dollars if they deem it suspicious what ever this means.  I'm not 100percent sure of my last statement but I believe during my research last year I read it. 
That being said even if reported if it is from bitcoin I'm not sure what they will or can do.  This is probably a case by case thing with the cra what ever they do it will probably be a lengthy headache for the person depositing the cash.  The only way a large sum transaction isn't reported is if it's from a public body
Ie. The government municipality hospital etc. Or a financial institution like a bank.
After reporting to the cra it doesn't mean they will act but when it comes to tax time you never know what will happen.  Believe me I went through a year of suffering. So in conclusion I believe the question about taxing bitcoin is legitimate if you decide to put the cash or check into a bank

Edit
For any confusion my account wasn't frozen due to bitcoin but I have been trading crypto for years and making a living off of it.  I also won money at a couple casinos and had a import export business with large wire transactions going in and out.  They audited me said I owed 68000 dollars.  Which was ridiculous so I had to deal with the cra.  U definitely do not want to get audited.  They audited me 3 more times after because I sent them legitimate paperwork and got accountants involved. How ever this took a year and the cra switched there's collection agent on me 5 times and each time I had to report the exact same thing over and over this process took a year and my final owing being less than 3000 dollars and my credit in shambles due to not being able to make any credit card payments or use a bank.  So yes if u have bitcoin and plan on cashing them in MAKE SURE you do some research contact an accountant and the cra. I plan on cashing some bitcoin in soon but honestly I'm freaking hesitant lol. When you ask the cra they may not know a thing about bit coin but when time comes and the agent that didn't know a thing about bitcoin sees a large sum of money in an account what do you think the government will do.  Hmm this guy has a lump some of money not reported if it's taxable we need to take as much a we can now the agent with little knowledge gets booted off the case and in comes the government of Canada...whether they know nothing or something about bitcoin doesn't matter at this point.  Chances are even if you are able to keep all your money your gonna have to do a bunch of things that you more than likely don't want to do because you shouldn't have too but that's the way it goes

[justgonnalook]

I just want to add, you guys should head over to https://coinforum.ca/discussion/4635/bitcoin-and-taxes-in-canada-ask-your-questionscan. All tax questions will be collected and then given to a professional accountant. They will post the answers after. This year will be a bitch for taxes. Happy HoDLdays!

[OhMyHolyToken]

Hypothetical questions:

So, cashout 9000$ once a week is OK? Bank won't report that to CRA?

Quadrigacx won't report anything?

If I'll sell BTC for 30 000 and buy a gold for 30 000, without any capital gain, is OK for CRA?

How you guys cashout your crypto without involving CRA?

Thanks

[mOgliE]

Hi,

Most governmental agencies do know about bitcoin... They just wonder how to deal with it... The bitcoin is not a real money, it is a digital currencies with rather chaotic trends...

As most governments think that for the moment, it is better to ignore bitcoin, of course institutionnal concerns cannot be adressed.

Yet, for you it can be a good thing. If there is nothing in the law, it is not illegal, so take advantage of it!

[megashira1]

Hypothetical questions:

So, cashout 9000$ once a week is OK? Bank won't report that to CRA?

Quadrigacx won't report anything?

If I'll sell BTC for 30 000 and buy a gold for 30 000, without any capital gain, is OK for CRA?

How you guys cashout your crypto without involving CRA?

Thanks

Consistent sums under the FINTRAC reporting threshold will get flagged as suspicious and reported anyways. Assume every $ that enters your bank account will be reported to the CRA.

BTC for Gold would act as a disposition of Crypto for another Asset triggering tax implication.

Crypto to Crypto as it currently stands seems like a Gray area when it comes to the law and tax implications. This area can be exploited to reduce once tax implications I believe.