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Digital Assets: The Future Of Capital Markets “For many years, certain parts of financial markets have been burdened by unnecessary restrictions leading to inefficiencies regarding the free allocation of capital. The upcoming broad applications of digital assets promise to change this. This article serves as an introduction to the topic of digital assets and describes some of the associated opportunities and challenges for retail investors, institutional investors, and financial service providers.”
Digital assets: Everything you need to know “Today, even most small businesses have a website — about 64 percent, as of 2019. That number is sure to rise, since between 70-80 percent of consumers research companies online before making a purchase. The business world is well into the digital age. Most modern businesses are essentially media businesses, actively creating content for their websites, their social media accounts, and their marketing campaigns. All that digital content, plus some other documents and files behind the scenes, defines a broad category of files called “digital assets.”
Digital Asset Price Movements are Becoming More Efficient “Bitcoin’s reaction to Inflation Data – In an otherwise quiet week for digital assets, US economic data took center stage. The year-over-year rise in the US Consumer Price Index (CPI) jumped to 6.2% in October, its highest level in over 30 years, and the fifth month in a row where the inflation rate topped 5.0%. The market responded immediately, and rationally. Government bond yields rose 11 bps, reversing the previous week’s decline in yields, though real yields are at a 70-year low of around -4.6% (so much for the risk-free rate — the volatility in government bond prices in recent months has picked up to post-pandemic highs). Even gold briefly woke up, rising 2.6% (though it remains negative YTD).”
What are Digital Assets? “The term “digital asset” has become more common in marketing and creative communication – and with good reason. According to Venngage, 74% of marketers now use visuals in over 70% of their content. But, despite the increased use of digital assets, there’s still a disconnect between what’s considered a digital asset. Is it just any digital file? If not, what are the other criteria? In this post, we’ll explore the key elements of digital assets, how to evaluate the value of your digital assets and why digital assets are important to your business.”
What are Digital Assets? “The definition of a digital asset is “anything that exists in binary data which is self-contained, uniquely identifiable, and has a value or ability to use.” When the term originated in the mid-90s, digital assets were items such as videos, images, audio, and documentation. Since then, technological advances have given the term new life.”
CryptoCurrency Watch – Update October 25, 2021 With the authorization of the Bitcoin ETF a week ago Friday, the rate of Bitcoin started to boost slowly. Last Tuesday was a silent day with not a great deal of activity. Several advocates of Bitcoin have actually been waiting years for this minute.
What does this mean though, and also why do Bitcoin ETFs signal better fostering possibility?
We can see that regulatory authorities will certainly permit a specific degree of fostering. That suggests it’s reasonable to prepare for a surge in Bitcoin fostering in monetary markets, which causes even more customers for the marketplace generally.
The spin is that getting this certain Bitcoin ETF from Proshares is extra difficult than acquiring Bitcoin from an exchange or trading system like Coinberry. An ETF of any type of kind approved by the SEC is an action towards having a much better exchange-traded fund that’s simpler for capitalists to acquire.
In enhancement to Proshares, 2 even more firms, Van Eck and also Valkyrie, will certainly additionally be releasing Bitcoin ETFs as quickly as this week. Review much more regarding what exchange-traded funds indicate for Bitcoin from this brand-new short article from Coindesk information <a href
It really did not constantly begin out this method. Started by a semi-anonymous creator with the pseudonym of Satoshi Nakamoto, Bitcoin needed to get rid of a variety of exceptionally challenging difficulties to reach where it is today.
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With the authorization of the Bitcoin ETF a week ago Friday, the rate of Bitcoin started to boost slowly. In enhancement to Proshares, 2 even more firms, Van Eck as well as Valkyrie, will certainly likewise be introducing Bitcoin ETFs as quickly as this week. Check out extra regarding what exchange-traded funds suggest for Bitcoin from this brand-new write-up from Coindesk information <a href
noopenerSpace data-saferedirecturl=”https://www.google.com/url?q=https://coinberry.apms5.com/anywhere/m?s%3Dcoinberry%26m%3Ds_b466d614-2ac4-47f1-a150-d7c338fc1e9b%26u%3De1jq4wvfdtfkccu18rwk4dhr5mr3ae1k5mu30c215mw4ch1h5n148da668v48ha2850kc%26r2%3Dd1u78w3k78qjyxvqewq66vv9dtj6awvb5thpyv9fdngq4uv5ehtjychg68rjyc9g5wrkjbv6d5t76x1dc9mq8rvfd5q2utknehuq4tbk5njq8thdc9mq8vtddtjp2wkk5mrp4bbme9gp8ubecwpqcvvcenppabbfdrppcubjedu2ut31f4qkyxbmdnfp6rbde1gpjtve7n76axvkdhjq8x35e8nmwtbq5cpjpkv3egnk2ebmd0nk4c1j64k7ax3dbxppat39enpkutbdc5mpr9knehpnywvfent66t9xc5uq8vvgd5p6yx0%26n%3D2&source=gmail&ust=1635289498447000&usg=AFQjCNHgL9kRGZWNvCcYD3zQo-xLVQkDog” > here. Invest with the # 1 Platform in Canada!
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Monday, October 25, 2021
Explainer: What are the Facebook Papers?
Canada’s rising cost of living price climbed to 4.4 percent in September, a degree not seen considering that February 2003, according to Statistics Canada. WCB account.
( OHS Act). Alberta’s work environments will certainly be much healthier and also more secure since the upgraded regulations are less complicated to use and also recognize for employees and also companies. The modifications to the OHS Act and also changed policies take result on Dec. 1, 2021.
For companies, the upgraded OHS regulations aid them guarantee their work environments are as risk-free as well as healthy and balanced as feasible and also decrease the expenses connected with work environment injuries as well as health problem. For employees, the upgraded OHS legislations remain to supply essential civil liberties as well as securities to assist guarantee they are operating in secure and also healthy and balanced settings.
Earnings Canada has actually presented brand-new GST/HST laws for electronic economic climate organizations as of July 1, 2021. Digital company such as songs or video clip streaming solutions or mobile applications have actually not been formerly called for to bill Canada’s sales tax obligation when making sales in Canada.
Volunteer Disclosure Program (VDP) is a conformity step that permits taxpayers to deal with errors on their formerly submitted tax obligations such as revealing details concerning unreported earnings, or to submit a tax return that ought to have been submitted.
If you recognized you failed to remember to report international possessions as well as did not send T1135 in your previous year’s return when you must have, you can willingly reveal the international properties instead than waiting for the Canada Revenue Agency to locate out themselves. Revenue acquired from cryptocurrency trading is additionally a subject to tax obligation and also requires to be reported.
You will certainly still have to pay the tax obligations owing, plus passion that will certainly result from inaccurate filings., you can be subject to tax obligation fines or prosecution. Sell and also purchase Cryptocurrency in Minutes!
Canada’s rising cost of living price increased to 4.4 percent in September, a degree not seen considering that February 2003, according to Statistics Canada. Profits Canada has actually presented brand-new GST/HST laws for electronic economic situation services as of July 1, 2021. Digital organization such as songs or video clip streaming solutions or mobile applications have actually not been formerly called for to bill Canada’s sales tax obligation when making sales in Canada. If you recognized you failed to remember to report international possessions as well as did not send T1135 in your previous year’s return when you ought to have, you can willingly reveal the international possessions instead than waiting for the Canada Revenue Agency to discover out themselves. Earnings obtained from cryptocurrency trading is likewise a subject to tax obligation as well as requires to be reported.
Eligible businesses, entities and organizers that participate in the Restrictions Exemption Program can operate as usual if they require patrons aged 12 and older to provide proof of vaccination or negative test result. Mandatory indoor masking is still required.
To request an employee return to work after a layoff, an employer must serve a recall notice to the employee in writing. Employees are not required to be tested for COVID-19 before they return to work.
If an employee fails to return to work within 7 days of receiving the recall notice, the employer may terminate their employment. The employee is not entitled to termination notice or termination pay in this case.
Masks are mandatory in all indoor public spaces, workplaces, and places of worship as of September 16.
Employees must mask for all indoor settings, except while alone in work stations.
For more information on masking, including how to wear and care for your mask, see mask requirements.
A one-time payment of $2,000 to eligible Alberta small and medium-sized businesses, cooperatives and non-profit organizations is now available for those participating in the Restrictions Exemption Program.
Eligible industry associations will be able to access funding to develop or procure safety training that helps workers assess and manage challenging situations when implementing the Restrictions Exemption Program. Workers and employers will be able to access this training through select industry associations.
More information about the Restrictions Exemption Program Training Grant will be released soon.
The Alberta Jobs Now Program second application intake period will open on November 10 with changes to help employers meet their labour needs and provide more Albertans with the skills to find successful careers.
Private and non-profit businesses can apply for funding to offset the cost of hiring and training Albertans into new or vacant jobs.
Employers can get up to:
$25,000 for each new hire, or
$37,500 for each new employee with a disability
Workers cannot apply for the program directly, but can let potential employers know they can apply for the Alberta Jobs Now program if they hire you.
Education property tax rates were frozen at last year’s level – reversing the 3.4% population and inflation increase added in Budget 2020.
Collection of non-residential education property tax for businesses was deferred for 6 months to September 30, or a deferral of both municipal and education property tax for a shorter time that is of equivalent benefit.
Municipalities were expected to set education property tax rates as they normally would, but defer collection.
Commercial landlords are encouraged to pass savings on to their tenants through reduced or deferred payments to help employers pay their employees and stay in business.
Taxpayers can contact their municipality directly for information on their municipality’s approach to education property tax deferral or to discuss a payment schedule to pay these deferred taxes.
Provincial quarantine rules for returning international travellers have been lifted, but federal travel requirements remain in place. For more information, see COVID-19 travel requirements.
As of July 29, 2021, close contacts of COVID-19 cases are no longer legally required to quarantine after an exposure to a case of COVID-19.
Alberta Health Services Public Health will continue to investigate and manage cases of COVID-19. However, it is strongly recommended that cases notify their close contacts of the exposure including those they work with.
The following recommendations apply to business operators, staff members, as well as others potentially exposed to a COVID-19 case:
They should monitor for symptoms for 14 days after the exposure. If they develop symptoms, they must isolate and should get tested.
Follow all provincial public health restrictions including masking and physical distancing as well as and any local municipal restrictions in your area.
Follow good public health practices such as handwashing or sanitizing hands often and environmental cleaning.
Close contacts who are not fully vaccinated should avoid high-risk locations such as continuing care facilities and crowded indoor spaces.
Proof of a negative COVID-19 test and/or a medical note is not required to return to school, work or activities once the isolation period is complete. Learn more about isolation and quarantine requirements.
COVID-19 resources are available in Arabic, 中文, हिंदी, 한국어, ਪੰਜਾਬੀ, Af-Soomaali, Español, Français, Tagalog, Tiếng Việt and Urdu.
Two Tips To Keep Your Online Activity- And Your Bitcoin- Safer “Staying safe online is becoming tougher and tougher. We are now in a period where cyber-attacks are becoming a part of daily life and which not only affect individuals but whole countries. Recently it was suggested that North Korea has begun attacking other countries internet systems in order to disrupt and put pressure on their enemies. It was reported by bbc.co.uk that North Korea were behind and recent wannacry security hack that affected the NHS in the UK and put pressure on services in the United States.”
The beginner’s guide to creating & selling digital art NFTs“Unlockable content, filterable properties, limited-edition listings, and more… As word spreads about the rise of Non-Fungible Tokens (NFTs), we’re fielding more and more questions from artists and creators looking to sell their work on the blockchain. For many, the first steps can be tricky to overcome. Crypto wallets? Ethereum? We’ve all been there. Here’s how to turn your art into NFTs and list them for sale on OpenSea.
Edition365: A portrait of the year that changed everything “Since the coronavirus pandemic swept the world in March 2020, humanity has shared – and documented – an extraordinary experience. History has unfurled in front of our eyes; cracks in our systems have been magnified, and across oceans and borders, ways of thinking, acting, and existing remain in flux. Intended to stand as a historical reference for decades to come, Edition365 is the newest open call from 1854 and British Journal of Photography, set to produce a global and multi-faceted portrait of the year that changed everything. Edition365 will culminate in a major virtual exhibition in collaboration with growing nexus of the digital art space, New Art City, alongside a collectible photobook and an NFT auction.
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Definition: “Crypto wallets store your private keys, keeping your crypto safe and accessible. They also allow you to send, receive, and spend cryptocurrencies like Bitcoin and Ethereum.”
Crypto wallets keep your private keys – the passwords that give you access to your cryptocurrencies – safe and accessible, allowing you to send and receive cryptocurrencies like Bitcoin and Ethereum. They come in many forms, from hardware wallets like Ledger (which looks like a USB stick) to mobile apps like Coinbase, which makes using crypto as easy as shopping with a credit card online.
Why are crypto wallets important?
Unlike a normal wallet, which can hold actual cash, crypto wallets technically don’t store your crypto. Your holdings live on the blockchain, but can only be accessed using a private key. Your keys prove your ownership of your digital money and allow you to make transactions. If you lose your private keys, you lose access to your money. That’s why it’s important to keep your hardware wallet safe, or use a trusted wallet provider like Coinbase.
How do you use a crypto wallet?
Crypto wallets range from simple-to-use apps to more complex security solutions. The main types of wallets you can choose from include:
Paper wallets: Keys are written on a physical medium like paper and stored in a safe place. This of course makes using your crypto harder, because as digital money it can only be used on the internet.
Hardware wallets: Keys are stored in a thumb-drive device that is kept in a safe place and only connected to a computer when you want to use your crypto. The idea is to try to balance security and convenience.
Online wallets: Keys are stored in an app or other software – look for one that is protected by two-step encryption. This makes sending, receiving, and using your crypto as easy as using any online bank account, payment system, or brokerage.
Each type has its tradeoffs. Paper and hardware wallets are harder for malicious users to access because they are stored offline, but they are limited in function and risk being lost or destroyed. Online wallets offered by a major exchange like Coinbase are the simplest way to get started in crypto and offer a balance of security and easy access. (Because your private info is online, your protection against hackers is only as good as your wallet provider’s security – so make sure you look for features like two-factor verification.)
Using an app like Coinbase Wallet or Exodus gives you easy access to your crypto holdings. You can:
Manage all your digital assets in one secure place
Control your own private keys
Sendandreceive cryptocurrency to and from anywhere in the world
Interact with usernames rather than long, hexadecimal “public key” addresses
Many businesses operate using the Internet. Doing business like this is also called e-commerce. This page contains information on e-commerce and on reporting requirements for doing business on the Internet. There is also information on capital cost allowance for computer software and website development costs.
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E-commerce is the delivery of information, products, services or payments by telephone, computer or other automated media. This definition includes the many kinds of business activities that are being conducted electronically. However, e-commerce is much more comprehensive than just purchasing goods and services electronically.
E-commerce can also include retail transactions that take place by:
automated banking machine
secure private computer networks through electronic data interchange
the delivery of government services
business that is handled over the Internet
Reporting Internet business activities
All existing tax laws that apply to businesses also apply to business conducted over the Internet. If you earn income from one or more webpages or websites, you may need to report the web addresses and the income they earn. Depending on your business structure, you have different reporting requirements.
Webpages and websites to report
Indicate your webpages or websites that generate income. If you have more than five webpages or websites, specify the top five income generators. If they do not generate income, such as telephone directory websites and information-only webpages, you do not need to report them. Examples of webpages or websites that you should include are:
webpages and websites that allow the completing and submitting of an order form, the checking-out of a shopping cart or similar transactions
online marketplace websites where your goods or services are sold
webpages and websites hosted outside of Canada
advertisements, programs or traffic to your site that generate income
Report the gross income received from all of your Internet business activities as a percentage of your total gross income. If you cannot determine the exact percentage, give a reasonable estimate. See the headings below for how to report it depending on your business structure.
If it is computer software that is a depreciable asset, include it Class 12. If it is system software, include it in Class 8, 10, 29 or 40.
“Computer software” includes system software and a right or a license to use computer software.
“Systems software” refers to the general operating system that enables running the application of programs, directs and coordinates the different operations of the computer. This includes all of the input and output between the keyboard, the computer screen, the printer, the disk drives and other peripheral equipment.
Generally, software is considered depreciable if it is of an enduring nature, which generally means that its useful life is anticipated to be beyond one year.
There are no specific provisions in the Act regarding the treatment of website development costs but some of the principles in the Income Tax Folio S3-F4-C1 can apply to website development costs.
Whether a website development cost is current or capital is always a question of fact.
If a website development cost is a capital cost it may be for the acquisition of “general purpose electronic data processing equipment” and therefore included in Class 10(f) or it may be for the acquisition of computer software and therefore included in Class 12(o).
Records are all of your accounting and other financial information documents. These documents must be kept organized. The type of information your records contain depend on your situation and other factors such as:
your business type
the format you use to keep your records (paper, electronic or a combination of the two)
if you have converted any paper records or supporting documents into an electronic version
if you are involved in e-commerce (for more information, go to E-commerce)
if you are a GST/HST registrant
if you are an employer
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The Canada Revenue Agency (CRA) has detailed information for situations where your records, including those of your business, are affected by a disaster. For more information, including what qualifies as a disaster, go to Disasters and disaster relief.
If you need more information after reading the following topics, call 1-800-959-5525.
GST/HST and payroll records Information that GST/HST registrants and persons claiming a GST/HST rebate or refund must keep in their records, and the information that employers must keep in their records.
Specific information that certain entities have to keep Information that corporations, trusts, registered agents for registered political parties, official agents for candidates in a federal election, and registered charities, registered Canadian amateur athletic associations and other qualified donees must keep in their records.
Cryptocurrency is a relatively new innovation that requires guidelines on taxation so that Canadians are aware of how to meet their tax obligations. The Senate reviewed the issue of taxation on cryptocurrency in 2014 and recommended action to help Canadians understand how to comply with their taxes, which the Canada Revenue Agency (CRA) is doing by presenting this guide.
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Tax treatment of cryptocurrency for income tax purposes
Cryptocurrency is a digital representation of value that is not legal tender. It is a digital asset, sometimes also referred to as a crypto asset or altcoin that works as a medium of exchange for goods and services between the parties who agree to use it. Strong encryption techniques are used to control how units of cryptocurrency are created and to verify transactions. Cryptocurrencies generally operate independently of a central bank, central authority or government.
The following pages outline the income tax implications of common transactions involving cryptocurrency. When we refer to cryptocurrency in this publication, we are talking about Bitcoin or other similar virtual currencies.
The CRA generally treats cryptocurrency like a commodity for purposes of the Income Tax Act. Any income from transactions involving cryptocurrency is generally treated as business income or as a capital gain, depending on the circumstances. Similarly, if earnings qualify as business income or as a capital gain then any losses are treated as business losses or capital losses.
Taxpayers have to establish if a cryptocurrency activity results in income or capital because this affects the way the revenue is treated for income tax purposes. Not all taxpayers who buy and sell cryptocurrency are carrying on business activity.
When you use cryptocurrency to pay for goods or services, the CRA treats it as a barter transaction for income tax purposes. A barter transaction occurs when two parties exchange goods or services and carry out that exchange without using legal currency. For more information, please review our archived content on barter transactions.
To figure out the value of a cryptocurrency transaction where a direct value cannot be determined, you must use a reasonable method. Keep records to show how you figured out the value. Generally, the CRA’s position is that the fair market value is the highest price, expressed in dollars that a willing buyer and a willing seller who are both knowledgeable, informed and prudent, and who are acting independently of each other, would agree to in an open and unrestricted market. For example, you could choose an exchange rate taken from the same exchange broker you are using or an average of midday values across a number of high-volume exchange brokers. Whichever method you choose, use it consistently.
If you hold more than one type of cryptocurrency in a digital wallet, each type of cryptocurrency is considered to be a separate digital asset and must be valued separately. For example, a Bitcoin is valued separately from a Litecoin.
Reporting business income or capital gains from the disposition of cryptocurrency
What is a disposition?
This refers to the way you get rid of something, such as by giving, selling or transferring it. In general, possessing or holding a cryptocurrency is not taxable. But there could be tax consequences when you do any of the following:
sell or make a gift of cryptocurrency
trade or exchange cryptocurrency, including disposing of one cryptocurrency to get another cryptocurrency
convert cryptocurrency to government-issued currency, such as Canadian dollars
use cryptocurrency to buy goods or services
Is it business income or capital gain?
The income you get from disposing of cryptocurrency may be considered business income or a capital gain. In order to report it correctly, you must first establish what kind of income it is.
The following are common signs that you may be carrying on a business:
you carry on activity for commercial reasons and in a commercially viable way
you undertake activities in a businesslike manner, which might include preparing a business plan and acquiring capital assets or inventory
you promote a product or service
you show that you intend to make a profit, even if you are unlikely to do so in the short term
Business activities normally involve some regularity or a repetitive process over time. Each situation has to be looked at separately.
In some cases, a single transaction can be considered a business, for example when it is an adventure or concern in the nature of trade. Whether you are carrying on a business or not must be determined on a case by case basis. For more information, please review our archived content on an adventure or concern in the nature of trade.
Another factor in deciding if there is a business activity is the date when the business begins. If you are still setting up or preparing to go into business, you might not be considered to have started the business. You usually have to undertake significant activity that is part of your income-earning process. Any funds or property you receive before your business begins are not generally considered to be business income. Similarly, you cannot claim deductions for income tax purposes before the business begins. For more information, please review our archived content on the start of business operations.
Some examples of cryptocurrency businesses are:
cryptocurrency exchanges, including ATMs
Paragraphs 9 to 32 of Interpretation Bulletin IT-479R : Transactions in securities, provide general information to help you figure out if transactions are income or capital gains. Although the discussion of income and capital in this interpretation bulletin is helpful, remember that cryptocurrencies are not Canadian securities under the Income Tax Act.
Reporting as either income or capital gain
Generally, if disposing of cryptocurrency is part of a business, the profits you make on the disposition or sale are considered business income and not a capital gain. Buying a cryptocurrency with the intention of selling it for a profit may be treated as business income, even if it’s an isolated incident, because it could be considered an adventure or concern in the nature of trade.
If the sale of a cryptocurrency does not constitute carrying on a business, and the amount it sells for is more than the original purchase price or its adjusted cost base, then the taxpayer has realized a capital gain.
Capital gains from the sale of cryptocurrency are generally included in income for the year, but only half of the capital gain is subject to tax. This is called the taxable capital gain. Any capital losses resulting from the sale can only be offset against capital gains; you cannot use them to reduce income from other sources, such as employment income. You can carry forward your capital losses if you do not have any capital gains against which to offset those losses for the year or any of the preceding three years.
Trading cryptocurrency for another type of cryptocurrency
Generally, when you dispose of one type of cryptocurrency to acquire another cryptocurrency, the barter transaction rules apply. You have to convert the value of the cryptocurrency you received into Canadian dollars. This transaction is considered a disposition and you have to report it on your income tax return. Report the resulting gain or loss as either business income (or loss) or a capital gain (or loss).
Example 1: Business income or loss
Alice regularly buys and sells various types of cryptocurrencies. She pays close attention to the fluctuations in the value of cryptocurrencies and intends to profit from the fluctuations. Her activities are consistent with someone who is engaged in the business of day trading. In 2017, Alice sold $240,000 worth of various cryptocurrencies, which she originally purchased for $200,000. Her net profit is $40,000. Since Alice is actively trading in cryptocurrency, which is a commercial activity, she has to report business income of $40,000 on her 2017 income tax return.
Example 2: Capital gain or loss
Tim found a deal on a living room set at an online vendor that accepts Bitcoin. Tim acquired $3,500 worth of Bitcoin to buy the furniture with. By the time he bought the furniture and converted his remaining Bitcoin back into dollars, the value of Tim’s Bitcoin had increased by $500. The gain realized by Tim was on account of capital, so Tim has to report a $500 capital gain on his income tax return. However, only 50% of that capital gain is taxable.
Example 3: Trading one type of cryptocurrency for another
On July 30, 2018, Francis bought 100 units of Ethereum, which had a value of $20,600. For this purchase, Francis used 2.5061 Bitcoins, which were trading at $8,220 per unit on that day, or the equivalent of $20,600. We consider that Francis disposed of those Bitcoins. Francis originally bought those Bitcoins for $15,000 and exchanged them for 100 units of Ethereum at a value of $20,600, resulting in a capital gain. It is calculated as follows:
$20,600 [fair market value of 2.5061 Bitcoins at the time of transaction]
– $15,000 [adjusted cost base of 2.5061 Bitcoins, their original purchase price]
$5,600 capital gain
$5,600 capital gain taxed at 50% = $2,800 taxable capital gain
If, on the other hand, the original purchase price of the 2.5061 Bitcoins had originally been $25,000, but at the time that Francis exchanged them for 100 units of Ethereum they were worth only $20,600, he would have a capital loss. It is calculated as follows:
$20,600 [fair market value of 2.5061 Bitcoins at the time of transaction]
– $25,000 [adjusted cost base of 2.5061 Bitcoins, their original purchase price]
$4,400 capital loss
$4,400 capital loss × 50% = $2,200 allowable capital loss
This example assumes that the cryptocurrency in question was held as an investment on account of capital; however, if this transaction occurred in the course of conducting a business, the entire amount of $5,600 would need to be reported as income in the first transaction and the entire $4,400 would be reported as a loss in the second transaction.
Earning cryptocurrencies through mining
Cryptocurrencies are commonly acquired in two ways:
bought through a cryptocurrency exchange
earned through mining
Mining involves using specialized computers to solve complicated mathematical problems which confirm cryptocurrency transactions. Miners will include cryptocurrency transactions into blocks, and try to guess a number that will create a valid block. A valid block is accepted by the corresponding cryptocurrency’s network and becomes part of a public ledger, known as a blockchain. When a miner successfully creates a valid block, they will receive two payments in a single payment amount. One payment represents the creation of new cryptocurrency on the network and the other payment represents the fees from transactions included in the newly validated block. Those who perform the mining processes are paid in the cryptocurrency that they are validating.
The income tax treatment for cryptocurrency miners is different depending on whether their mining activities are a personal activity (a hobby) or a business activity. This is decided case by case. A hobby is generally undertaken for pleasure, entertainment or enjoyment, rather than for business reasons. But if a hobby is pursued in a sufficiently commercial and businesslike way, it can be considered a business activity and will be taxed as such.
Valuing cryptocurrencies either as capital property or inventory
To file your income tax return, you need to know how to value your cryptocurrencies. This depends on whether they are considered capital property or inventory. When cryptocurrencies are held as capital property, you must record and track the adjusted cost base so that you can accurately report any capital gains.
If the cryptocurrencies are considered to be inventory, use one of the following two methods of valuing inventory consistently from year to year:
value each item in the inventory at its cost when it was acquired or its fair market value at the end of the year, whichever is lower
value the entire inventory at its fair market value at the end of the year (generally, the price that you would pay to replace an item or the amount that you would receive if you sold an item)
You might have to use other methods of valuing inventory, depending on the type of business you have. For example, property described in the inventory of a business that is an adventure or concern in the nature of trade must be valued at the cost you acquired the property for.
You will have to compare the cost and the fair market value of each item to figure out which is lower. You then use the lower figure for each item (or each class of items if specific items are not easily separated) to calculate the total value of your inventory at the end of the year.
“Cost” as used in the phrase “cost at which the taxpayer acquired the property,” means the original cost of the particular item of inventory (for example, a block of cryptocurrency), plus all reasonable costs incurred to buy that particular block of cryptocurrency.
Use the same inventory method from year to year. Please review our archived page on inventory .
For more information on valuating inventory, including the special rules for an adventure in the nature of trade, please review our archived content on this topic here.
Keeping books and records
If you acquire (by mining or otherwise) or dispose of cryptocurrency, you have to keep records of your cryptocurrency transactions. This also applies to businesses that accept cryptocurrency as payment for goods and services.
Cryptocurrency exchanges have different standards for the kinds of records they keep and how long they keep them. If you use cryptocurrency exchanges, we suggest that you export information from these exchanges periodically to avoid losing the information necessary to report your transactions. You are responsible for keeping all required records and supporting documents for at least six years from the end of the last tax year they relate to.
You should maintain the following records on your cryptocurrency transactions:
the date of the transactions
the receipts of purchase or transfer of cryptocurrency
the value of the cryptocurrency in Canadian dollars at the time of the transaction
the digital wallet records and cryptocurrency addresses
a description of the transaction and the other party (even if it is just their cryptocurrency address)
the exchange records
accounting and legal costs
the software costs related to managing your tax affairs.
If you are a miner, also keep the following records:
receipts for the purchase of cryptocurrency mining hardware
receipts to support your expenses and other records associated with the mining operation (such as power costs, mining pool fees, hardware specifications, maintenance costs, and hardware operation time)
the mining pool details and records
Please note that different types of software are available to track cryptocurrency trades and maintain records. The CRA does not endorse any particular software, so choose the type of software that is best for you to help with your record keeping.
Where a taxable property or service is exchanged for cryptocurrency, the GST/HST that applies to the property or service is calculated based on the fair market value of the cryptocurrency at the time of the exchange.
If your business accepts cryptocurrency as payment for taxable property or services, the value of the cryptocurrency for GST/HST purposes is calculated based on its fair market value at the time of the transaction.
Keep all records that show how you calculated the fair market value.
If you do not keep track of exactly how much cash you’re making, you have no idea whether your choices and strategies are effective or not. And if you do not track these things you won’t have any idea how to fix issues that arise.
When picking strategies, you want to ensure you are as effective as possible. To do so, it is advisable for you to review your progress and adjust and/or revise your strategy, no less than on a monthly basis. If you are tracking often you will always ensure you keep on top of small troubles so they do not escalate to larger issues.
Unfortunately no business idea is truly unique anymore, which means that from time to time you will experience a reduction in profits. When this inevitably happens the best strategy is to revisit your marketing and advertising strategies, review your prices and evaluate your cost of goods margins.
If you do not keep track of how much cash you are making, you truly won’t have any idea of how profitable and sustainable your company is and will be in the future. If you do not know this you cannot hope to be in business for a long time. The simplest strategy for keeping yourself in business is to monitor your cashflow and profits over time. If you are not doing this you will not be prepared to weather hard drops in the market.