Taxes

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Taxation on cryptocurrencies varies widely by country, use case of the tokens, personal vs business use, time length held for, and other factors. Regulation and taxation is still in flux the world over. If you are concerned about your tax liability please consult a tax professional in your jurisdiction.

Taxes

Lots of detail on short-term vs. long-term capital gains from Investopedia.

Cryptocurrency is taxed as a commodity/security rather than a currency in both USA and Canada.

Taxable Events

You are expected to calculate and report your gains or losses from ALL of the following taxable events:

  • Selling or gifting a cryptocurrency
  • Trading or exchanging one cryptocurrency for another
  • Converting cryptocurrency to fiat currency such as $CAD or $USD
  • Using cryptocurrency to buy goods or services
  • Receiving cryptocurrency through an airdrop
  • Receiving cryptocurrency as a result of hard forks

Mining Cryptocurrency

If you are mining as a business with a business license taxation rules are different than mining as a hobby.

Canada

  • Cryptocurrency is taxed in Canada as either capital gains or as income tax, depending on whether your activity with cryptocurrency is considered to be as a business or not. **100% of business income is taxable, whereas only 50% of capital gains are taxable. If you're unsure whether you are operating on a personal or a business level, consult with a tax professional.
  • Cryptocurrency is taxed as a commodity by the Canadian Revenue Agency.

Capital Gains & Losses

  • Taxation in Canada is based on the difference between the sale revenue of your crypto and your adjusted cost base (ACB).

Canada Tax Guide

A full Canada crypto tax guide is available from Koinly.io.

USA

  • Note about tax brackets: Taxable income is charged at a marginal tax rate, meaning your first $9,950 of short-term capital gains is taxed at 10% and then the excess is taxed at next rate i.e. income from $9,951-$40,525 is taxed at 12%, and so on.
  • Cryptocurrency is taxed as a commodity and/or security by the Internal Revenue Service.

Short-term Capital Gains

  • US currently treats gains and losses from crypto held for less than one year as short-term capital gains or losses.
Short-term USA capital gains rates

Long-term Capital Gains

  • If held for more than one year, it is treated as long-term capital gains or losses.
Long-term USA capital gains rates

US Tax Guide

A full US tax guide is available from Accointing.com

Tax rate images are from Turbotax.

UK

  • Holding cryptocurrency as an investment is subject to capital gains tax when "disposed" of. Disposal is what is known as a taxable event in US and Canada.
  • Capital gains taxes depend on your taxable income band. You have an allowance for your first £12,570 of income tax free.
  • Cryptocurrency is taxed as four separate types of cryptocurrencies, differentiated by use case of each token by Her Majesty's Revenue and Customs (HMRC).

Capital Gains Tax Bands

  • Unlike the US and Canada, the UK does not differentiate long-term vs short-term capital gains.
  • Capital gains bands are different in you live in Scotland.
UK capital gains tax bands

Tax rate image is from gov.uk.

UK Tax Guide

A full UK tax guide is available from Koinly.io. There is a second UK tax guide from Cointracker.io.

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