NFTs & Crypto earnings must be reported on tax returns although, like regular investment properties, they are taxed only on profits (or losses), not on initial investment amounts, or the qualifying expenses associated with carrying and managing that investment.
Note that you cannot pay amounts due to CRA in cryptocurrency, so you may have to cash out some investments to pay your income tax due.
If you operate a business and receive payments for your business services/products in the form of cryptocurrency, these payments must be included in your T2125 statement of business activities.
Additionally, if you’re running a crypto business, both the income & associated expenses would be considered business expenses activities reported on your T2125 (not reported as capital gains).
As of January 1, 2022, Crypto exchanges report all transactions over $10,000 to the CRA. Not reporting any crypto gains or losses to CRA is considered illegal tax evasion.
Tax Fairy Godmother
Debbie Horovitch
