Key Takeaways
- 1.The 50% capital gains inclusion rate applies for 2025. The proposed 66.67% rate was cancelled and never enacted. Marcus's $95,000 gain means $47,500 is added to taxable income — not $63,333.
- 2.All BTC across wallets and exchanges is pooled into a single ACB under the identical property rule. You cannot cherry-pick high-cost lots to reduce gains.
- 3.If Marcus sold ETH at a loss and repurchased within 30 days, the superficial loss rule denies the loss on Schedule 3. The denied amount is added to the new ETH's ACB.
- 4.Crypto on non-Canadian exchanges (Coinbase, Kraken, Binance) is foreign property. If total cost exceeds $100,000 CAD at any point in the year, Form T1135 is required.
- 5.After-tax net on the $95,000 gain ranges from $81,640 (at $80K income) to $72,266 (at $200K income) — a $9,374 difference driven entirely by Ontario's progressive brackets.
The Scenario: Five Years of Crypto, One Taxable Event in 2025
Marcus is a salaried professional living in Toronto. Between 2020 and 2024, he bought Bitcoin and Ethereum across multiple platforms: Coinbase (USD-denominated), Kraken (USD), and Shakepay (CAD). In March 2025, he sold all positions for a combined $185,000 CAD in proceeds. His total adjusted cost base, after converting every purchase to CAD at the Bank of Canada rate on each transaction date, is $90,000. The resulting capital gain is $95,000.
How CRA Treats Cryptocurrency: Commodity, Not Currency
CRA classifies cryptocurrency as a commodity. Every disposal — selling for fiat, trading crypto-to-crypto, or spending crypto on goods — is a taxable event. The 50% capital gains inclusion rate applies for 2025, meaning half of your net capital gain is added to your taxable income.
Clarification on the 66.67% inclusion rate: The 2024 federal budget proposed increasing the inclusion rate to 66.67% on capital gains exceeding $250,000 for individuals, effective June 25, 2024. This proposal was cancelled and never enacted into law. For the 2025 tax year and all prior years, the inclusion rate remains 50% on all capital gains regardless of amount. If you heard media coverage of the change and are unsure whether it applies to your 2025 filing — it does not.
For a deeper analysis of how the proposed inclusion rate change would have affected Ontario investors, see our capital gains inclusion rate 2025 calculator for Ontario investors.
Step 1: Adjusted Cost Base Pooling Across Wallets
Under CRA's identical property rule (Income Tax Act section 47), all units of the same cryptocurrency are pooled regardless of where they are held. Marcus cannot use FIFO or specific identification — he must compute a single weighted-average ACB per coin across all wallets.
Bitcoin ACB Calculation
| Date | Exchange | BTC Bought | Cost (CAD) | Running ACB/BTC |
|---|---|---|---|---|
| Oct 2020 | Coinbase | 0.50 | $9,500 | $19,000 |
| Mar 2021 | Kraken | 0.30 | $22,800 | $40,375 |
| Jan 2022 | Shakepay | 0.20 | $11,200 | $43,500 |
| Total BTC held | 1.00 | $43,500 | $43,500 | |
Each USD purchase was converted to CAD at the Bank of Canada rate on the transaction date. Transaction fees are included in the cost amount.
Ethereum ACB Calculation
| Date | Exchange | ETH Bought | Cost (CAD) | Running ACB/ETH |
|---|---|---|---|---|
| Feb 2021 | Coinbase | 15.0 | $30,000 | $2,000 |
| Nov 2021 | Kraken | 5.0 | $16,500 | $2,325 |
| Total ETH held | 20.0 | $46,500 | $2,325 | |
Combined Portfolio ACB:
Bitcoin: 1.00 BTC × $43,500 ACB/BTC = $43,500
Ethereum: 20.0 ETH × $2,325 ACB/ETH = $46,500
Total ACB across all wallets: $90,000
Step 2: CAD Conversion at Each Transaction Date
CRA requires every acquisition and disposition to be recorded in Canadian dollars using the Bank of Canada daily exchange rate for the transaction date. This is non-negotiable — you cannot use annual averages, your bank's exchange rate, or the rate on the day you transferred funds.
For Marcus, his Coinbase and Kraken purchases were USD-denominated. Each purchase required a separate CAD conversion. The Shakepay purchase was already in CAD. His March 2025 sale proceeds were partially in USD (Coinbase, Kraken) and partially in CAD (Shakepay), and each disposition amount was converted to CAD at the Bank of Canada rate on the sale date.
If you hold US-listed investments alongside crypto, the same conversion rules apply — see our US stock capital gains calculator for Canadian investors for a worked example of forex conversion on investment dispositions.
Step 3: Calculate the Capital Gain
Bitcoin Gain:
Proceeds (1.00 BTC sold March 2025): $120,000 CAD
ACB: $43,500
Capital gain on BTC: $76,500
Ethereum Gain:
Proceeds (20.0 ETH sold March 2025): $65,000 CAD
ACB: $46,500
Capital gain on ETH: $18,500
Total capital gain: $76,500 + $18,500 = $95,000
Taxable capital gain (50% inclusion): $47,500
Step 4: The Superficial Loss Rule and Crypto
Suppose Marcus had sold his ETH at a loss in February 2025 and repurchased ETH in March 2025 before selling everything. The superficial loss rule would deny the February loss entirely.
Superficial Loss Example:
Feb 10, 2025: Sell 20 ETH for $40,000 (ACB $46,500) → Loss of $6,500
Feb 20, 2025: Rebuy 20 ETH for $41,000
Because Marcus repurchased identical property within 30 days:
• The $6,500 loss is denied on Schedule 3
• The denied loss is added to the new ETH ACB: $41,000 + $6,500 = $47,500
• If Marcus then sells the 20 ETH in March for $65,000:
Gain = $65,000 − $47,500 = $17,500 (instead of $18,500 on a clean sale)
The loss is deferred, not lost permanently — but only if you eventually sell without re-triggering the rule.
The 30-day window runs in both directions: 30 days before and 30 days after the sale. It also applies to affiliated persons — if your spouse repurchases the same crypto within 30 days of your sale, the loss is denied. This makes crypto tax-loss harvesting significantly more constrained than many investors realize.
Step 5: Schedule 3 Reporting Requirements
Crypto capital gains and losses are reported on Schedule 3 — Capital Gains (or Losses), filed with your T1 return. Crypto dispositions go in the “Other Properties” section, not “Publicly Traded Shares.”
| Schedule 3 Field | What to Enter | Marcus's Amount |
|---|---|---|
| Description of property | 1.00 Bitcoin (BTC) | — |
| Proceeds of disposition | Sale amount in CAD | $120,000 |
| Adjusted cost base | Pooled ACB for all BTC | $43,500 |
| Outlays and expenses | Trading fees, withdrawal fees (in CAD) | $0* |
| Capital gain | Proceeds − ACB − expenses | $76,500 |
*Fees already included in ACB and deducted from proceeds in this example. Repeat for each cryptocurrency disposed (ETH entered as a separate line item).
Step 6: T1135 — Foreign Income Verification Statement
Marcus held crypto on Coinbase and Kraken — both non-Canadian exchanges. If the total cost of his foreign-held crypto plus any other specified foreign property exceeded $100,000 CAD at any point during 2025, he must file Form T1135.
T1135 Assessment for Marcus:
Crypto ACB on Coinbase: $39,500 (BTC $9,500 + ETH $30,000)
Crypto ACB on Kraken: $39,300 (BTC $22,800 + ETH $16,500)
Total foreign-held crypto cost: $78,800
Crypto on Shakepay (Canadian): $11,200 — does not count
Peak foreign-held cost in 2025 (before March sale): $78,800
T1135 required? No — below $100,000 threshold.
If Marcus had an additional $25,000 in US stocks in a non-registered account, the combined foreign property total of $103,800 would trigger the T1135 requirement.
After-Tax Net at Three Ontario Income Levels
The $47,500 taxable capital gain is added on top of Marcus's other income. The marginal rate he pays depends on which federal and Ontario brackets the additional $47,500 pushes him into. Below are three scenarios using 2025 tax brackets.
Scenario A: $80,000 Employment Income + $47,500 Taxable Gain
Total taxable income: $127,500
Federal tax on the $47,500 gain:
$80,000 to $114,750 (20.5% bracket): $34,750 × 20.5% = $7,124
$114,750 to $127,500 (26% bracket): $12,750 × 26% = $3,315
Federal tax on gain: $10,439
Ontario tax on the $47,500 gain:
$80,000 to $102,894 (9.15% bracket): $22,894 × 9.15% = $2,095
$102,894 to $127,500 (11.16% bracket): $24,606 × 11.16% = $2,746
Ontario tax on gain: $4,841
Total tax on the $95,000 capital gain: $10,439 + $4,841 = $15,280
Effective rate on the gain: 16.1%
After-tax net from crypto: $95,000 − $15,280 = $79,720
Scenario B: $120,000 Employment Income + $47,500 Taxable Gain
Total taxable income: $167,500
Federal tax on the $47,500 gain:
$120,000 to $158,468 (26% bracket): $38,468 × 26% = $10,002
$158,468 to $167,500 (29% bracket): $9,032 × 29% = $2,619
Federal tax on gain: $12,621
Ontario tax on the $47,500 gain:
$120,000 to $150,000 (11.16% bracket): $30,000 × 11.16% = $3,348
$150,000 to $167,500 (12.16% bracket): $17,500 × 12.16% = $2,128
Ontario tax on gain: $5,476
Ontario surtax applies: 20% of provincial tax above $5,315 = 20% × $161 = $32
Total tax on the $95,000 capital gain: $12,621 + $5,476 + $32 = $18,129
Effective rate on the gain: 19.1%
After-tax net from crypto: $95,000 − $18,129 = $76,871
Scenario C: $200,000 Employment Income + $47,500 Taxable Gain
Total taxable income: $247,500
Federal tax on the $47,500 gain:
$200,000 to $247,500 (33% bracket, above $220,000 threshold):
$200,000 to $220,000 (29% bracket): $20,000 × 29% = $5,800
$220,000 to $247,500 (33% bracket): $27,500 × 33% = $9,075
Federal tax on gain: $14,875
Ontario tax on the $47,500 gain:
$200,000 to $220,000 (12.16% bracket): $20,000 × 12.16% = $2,432
$220,000 to $247,500 (13.16% bracket): $27,500 × 13.16% = $3,619
Ontario tax on gain: $6,051
Ontario surtax: 20% of provincial tax above $5,315 + 36% above $6,802
Estimated surtax on gain portion: ~$1,808
Total tax on the $95,000 capital gain: $14,875 + $6,051 + $1,808 = $22,734
Effective rate on the gain: 23.9%
After-tax net from crypto: $95,000 − $22,734 = $72,266
Comparison Summary
| Employment Income | Tax on $95K Gain | Effective Rate | After-Tax Net |
|---|---|---|---|
| $80,000 | $15,280 | 16.1% | $79,720 |
| $120,000 | $18,129 | 19.1% | $76,871 |
| $200,000 | $22,734 | 23.9% | $72,266 |
The $7,454 difference between the $80K and $200K scenarios is entirely due to progressive marginal rates. The capital gain itself is the same $95,000 in every case.
For a side-by-side breakdown of Ontario income tax brackets, see our Ontario income tax 2025 take-home calculator.
What If the $95,000 Gain Had Been Subject to 66.67% Inclusion?
Since the proposed rate increase is a major source of confusion, here is what Marcus would have owed at the $120,000 income level if the 66.67% inclusion rate had been enacted:
Hypothetical 66.67% inclusion (NOT in effect):
First $250,000 in gains at 50%: $95,000 × 50% = $47,500 (same as actual)
Marcus's gain is below $250,000, so even under the cancelled proposal, his inclusion would have been identical at $47,500.
The 66.67% rate only would have applied to the portion of gains above $250,000. For the proposed rate to have cost Marcus extra tax, his capital gain would have needed to exceed $250,000 — for example, a $400,000 gain would have been included at $250,000 × 50% + $150,000 × 66.67% = $225,005 instead of $200,000.
Bottom line: the cancelled proposal would not have affected Marcus regardless.
Practical Checklist: Filing Crypto Gains in Ontario
- Track every transaction in CAD: Use the Bank of Canada daily rate for each buy, sell, swap, and spend. Document the rate and date.
- Pool ACB by coin: All BTC is one pool, all ETH is another. Do not separate by wallet or exchange.
- Watch the 30-day window: If you sell at a loss, do not repurchase the same coin within 30 days (before or after) unless you accept the loss deferral.
- Report on Schedule 3: Use the “Other Properties” section. One line per cryptocurrency disposed.
- Check T1135 threshold: If crypto on foreign exchanges plus other foreign property exceeded $100,000 cost at any point, file T1135.
- Keep records for 6 years: CRA can reassess for up to 6 years. Retain exchange statements, wallet transaction histories, and Bank of Canada rate screenshots.
- Crypto-to-crypto trades are dispositions: Swapping BTC for ETH triggers a gain/loss on the BTC. Do not skip these.
For Ontario investors who also sold a cottage or investment property in 2025, the capital gains stacking effect can push you into higher brackets — see our Ontario cottage capital gains calculator for a worked example.
Important Disclaimer
This article provides general information about cryptocurrency taxation in Ontario, Canada. It is not legal, financial, or tax advice. The 50% capital gains inclusion rate reflects the current law as of the 2025 tax year — the proposed 66.67% rate from the 2024 federal budget was cancelled and never enacted. Federal and Ontario tax brackets used are 2025 estimates subject to CRA indexation. The identical property rule, superficial loss rule, and T1135 reporting requirements are summarized here but have additional complexities in specific situations (e.g., DeFi staking rewards, NFTs, airdrops). Exchange fees and transaction costs vary and are simplified in the worked examples. The Bank of Canada exchange rate requirement is mandatory for CRA filings. Consult a qualified tax professional for advice specific to your cryptocurrency holdings, particularly regarding business-income vs. capital-gains classification and crypto-to-crypto transaction tracking.