Cryptocurrency

The Essential Guide to Cryptocurrency: Personal Income

The Canada Revenue Agency considers Crypto currency as a commodity.

April 11, 2022

According to CRA, Canadians have to pay taxes on crypto-currency. Confused? Don't worry; we got you! Read the article, and you will get a better understanding of the situations when you have to pay taxes on personal crypto income. 

How does Crypto-Currency Work?

It's a type of currency that may be used to buy and sell products and services online. When you purchase crypto currency, all of your transactions, such as selling/buying goods and services, paying bills, and investing, occur digitally rather than physically.

FOR YOU

Register your business in Canada today

GET STARTED

“Cryptography is the essential building block of independence for organizations on the Internet, just like armies are the essential building blocks of states because otherwise one state just takes over another.” – Julian Assange

What is Personal Income?

Personal income includes wages and salaries, welfare benefits and other government aid, investment income, business ownership, and other sources.

FOR YOU

Register your business in Canada today

GET STARTED

“Learning how cryptocurrency works is like learning a new language. It is incredibly difficult at the beginning, but once it clicks it will stick with you forever.” ― Olawale Daniel

Tax on Personal Crypto Income:

1. Capital gain:

Only 50% of a capital gain on personal income is taxed whether you have preserved your assets for an extended period of time; the tax would still be 50%

2. Capital Loss:

Only capital losses can offset other capital gains, not to reduce income. If you have more losses than gains, these losses can be used to offset gains from the previous three years. If your earnings are insufficient to offset your losses, you can carry them forward to offset increases in subsequent years.

3. Ordinary Income:

If you pay crypto-currency as a salary or wage to your employees, the total will be added to their taxable income under subsection 5(1) of the Income Tax Act.

4. Adjusted Cost Basis Accountings:

Any crypto taxpayer must adjust their inventory on an average cost basis.

For example: if you buy crypto at different prices, inventory will be calculated on average for tax purposes.

Calculation on average:

1 unit= $50

1 unit= $70

1 unit= $40

1 unit= $100

Sum of 4 units = $260

Average 260/4= $65 Average cost.

FOR YOU

Register your business in Canada today

GET STARTED

[Cryptourrencies] may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system. –Ben Bernanke

The Bottom Line:

You have to pay taxes on your crypto earnings, and for that, you have to know all the rules and regulations. So, you don't need to be disappointed if you are confused about the whole process; Yogi & Associates have got you! We will make sure you get a better understanding of crypto earnings and the taxes on the earnings, and we will assist you in every step to deal. You can contact us online or please visit us in Mississauga to avail our services. In addition, we will ensure that you follow all the protocols to complete your taxes to make your ways easy.

Rafia Khalil

Executive Journalist

Recommended for you

Accounting

A Guide to High-Interest Saving Account:

Business

Claiming Your Business Expenses:Essential Guidelines

Business

Company Cars: To Lease or To Buy?

Business

The Top 3 Tax-Deductible Business Expenses in Canada

Business Incorporation

What to do next after Incorporating Your Business?

Payroll

Different Periods Of Payroll Frequency: An Essential Guide

Payroll

What is Payroll And How do I Set Up my Payroll

Business

A Quick Primer to Creating A CRA My Business Account

Business

Understanding the Tax Deadlines In 2022

Cryptocurrency

The Essential Guide to Cryptocurrency: Personal Income

Cryptocurrency

A Legal Guide to Crypto-currency: Business Income

Business

3 types of Master Business License

Business

Here’s How to Register for Master Business License

Business

How to Choose a Business Name in Canada?

Business

How to Start Your Business in Canada?

Business

How to choose a Corporate Fiscal Year-end Date

Business

Incorporating Your Business In Canada: How and Why

Accounting

Listing the Penalties for Filing Late GST/HST:

Accounting

The Legal Guide: GST/HST Return

Business

How to start charging and collecting GST/HST

Business

GST Number: How to Register for GST Number

Accounting

Everything You Need to Know about Input Tax Credits:

Accounting

Step By Step Guide To Payroll Remittances: PD7A Forms

Business

A Legal Guide to Work Permit in Canada:

Accounting

Four Essential Components of Payroll in Canada

Accounting

The Ultimate Payroll Set-up Checklist:

Business

A Complete Guide to Understand the TD1 Forms

Business

Minimum Wage Requirements: A Simple Guide

Business

Everything You Need to Know About Canada Pension Plan

Business

Why Should You Remit the Payroll Deductions

Business

The Ultimate Guide to Employment Insurance

Business

A Step-by-Step Guide to T4 Forms

Business

Employees and Contractors: The Beginners Guide!

Accounting

Everything You Need To Know About ROE

Accounting

2022 Statutory Holiday Schedule of Payroll:

Accounting

Is NFT Taxable In Canada?

Business

Which Business Expenses Are Tax-Deductible In Canada

Business

How to Understand Different Retirement Accounts

Business

5 Simple Ways to Know About CRCB Support Program

Business

The Essential Guide to CRSB Support Program

Business

What Is A Canada Worker Lockdown Benefit Program?

Business

Everything You Need To Know About Work Sharing Program

Accounting

Why is it important to return GST/HST?

Accounting

Exemption for charging GST/HST

Business

When and Why do I have to acquire an HST/GST number

Business

How to Register for HST/GST Number

Business Operation

Effectively run your business at home

Business Operation

What are the tools you can use to grow your business

Business

5 Amazing Benefits Of Soleproprietorship

Business Incorporation

Federal Vs Ontario: Which Incorporation is Best for You

Business Planning

How to write a Recession Proof Business Plan

Accounting

How to get approved for a Business Loan fast and easy