The Canadian Revenue Agency (CRA) has specified that virtual currencies are taxed like barter transactions. It can also be bought or sold like a commodity, with any resulting gains or losses being taxed as income or capital. Paragraphs 9-32 of the IT-479R provide guidance on determining whether transactions are income or capital. 100% of income is subject to tax, where only 50% of capital gains are included in taxable income.
Accounting methods: The CRA requires using Adjusted Cost Base (ACB) to calculate capital gains, and FIFO or ACB inventory methods can be used to track business income.
Foreign Property: When you hold foreign property greater than $100,000 CAD in value during any time throughout the year, you must fill out a T2125 Statement of Business or Professional Activities.
Airdrops or Forks: In Canada, the cost basis for these coins are 0, meaning that when the coins are disposed the entire proceeds are taxable as capital gains or business income.
Mining: Mining activity is considered a business operation, meaning inventory and business income rules apply. Any costs associated with mining activity needs to be calculated per coin and can be deducted against the proceeds.
Note: Lumina is intended to serve as an informational and assistive tool only. Lumina is not intended to substitute for professional tax, accounting, audit, or legal advice. Information provided on Lumina is subject to change without notice. Lumina is not responsible for the accuracy of your tax, audit, or legal compliance. Please consult a licensed professional for financial, tax, and legal advice.