Canada Crypto Mining Tax Guide 2025

CRA Treatment of Mining

The CRA treats crypto mining as taxable income:

• Mining rewards = ordinary income when received
• 100% taxable (not capital gains)
• Classified as business income or hobby income
• ACB = income value (for future capital gains)

Business vs Hobby Mining

Business Income (Most Miners)

If mining with profit motive and commercial manner:

• Report on T2125 (Statement of Business Activities)
• 100% taxable at marginal rate
• Can deduct business expenses
• Can offset losses against other income
• May require GST/HST registration
• Can claim CCA (depreciation) on equipment

Hobby Income (Casual Miners)

If mining casually without profit expectation:

• Report on Line 10400 (Other employment income)
• 100% taxable at marginal rate
• Cannot deduct expenses
• Cannot offset losses
• No GST/HST registration needed

How CRA Determines Business vs Hobby

CRA considers these factors:

• Profit motive: Clear intention to make profit?
• Commercial manner: Business-like operations?
• Time and effort: Significant time invested?
• Expertise: Technical knowledge and skills?
• Capital investment: Substantial equipment purchase?
• Regularity: Consistent, ongoing activity?

Example: Business vs Hobby

Business:

• Purchased CAD $60,000 in ASIC miners
• Dedicated facility with commercial power
• Business plan, separate bank account
• Registered for GST/HST
• Mining as primary income source

Hobby:

• Personal computer mining occasionally
• Annual income CAD $500
• No business organization or records
• Primarily for learning/interest

Income Calculation

When is Income Recognized?

When you receive coins:

• Solo mining: When you successfully mine a block
• Pool mining: When pool credits your account

Fair Market Value

FMV = CAD value at time of receipt:

• Use exchange rate from Canadian exchange
• Be consistent with valuation method
• Document source and exchange rate

Example: Income Calculation

• March 15, 2024: Receive 0.08 BTC from pool
• BTC price: CAD $85,000
• Business income: 0.08 × $85,000 = $6,800
• ACB for BTC: $6,800

GST/HST (Business Miners Only)

Registration Requirements

Must register if:

• Worldwide taxable supplies >$30,000 in any 12-month period
• "Taxable supplies" = value of mined crypto

GST/HST Rates

How GST/HST Works for Mining

• Collect: GST/HST on FMV of mined crypto
• Remit: Collected GST/HST to CRA
• Claim ITCs: Input Tax Credits on expenses (electricity, equipment)

Example: GST/HST

• Mine crypto worth $50,000 (Ontario)
• GST/HST owing: $50,000 × 13% = $6,500
• Expenses with HST: $20,000 equipment (HST: $2,600)
• Input Tax Credits: $2,600
• Net HST owing: $6,500 - $2,600 = $3,900

Deductible Expenses (Business Miners)

Common Deductions

1. Electricity: Power consumption for mining
2. Equipment: Mining hardware (CCA depreciation)
3. Rent: Dedicated mining facility
4. Internet: Business portion
5. Cooling: HVAC and ventilation
6. Repairs and maintenance: Equipment repairs
7. Pool fees: Mining pool charges
8. Software: Mining software subscriptions
9. Professional fees: Accountant, legal
10. Office expenses: If working from home

Capital Cost Allowance (CCA)

Mining equipment = Class 50 (55% declining balance):

• First year: 27.5% (half-year rule)
• Subsequent years: 55% of remaining balance
• Can claim less or skip years (strategic)

Example: CCA Depreciation

• Year 1: Buy equipment for $40,000
• Year 1 CCA: $40,000 × 27.5% = $11,000 deduction
• UCC end of year 1: $29,000
• Year 2 CCA: $29,000 × 55% = $15,950 deduction
• UCC end of year 2: $13,050

Home Office Expenses

If mining from home:

• Calculate business-use percentage of home
• Deduct portion of: rent/mortgage interest, utilities, insurance, property tax
• Must be principal place of business or used exclusively for business

Adjusted Cost Base (ACB)

Tracking ACB for Mined Crypto

ACB = income value when mined:

• Each mined coin adds to ACB pool
• Use average cost method (not FIFO)
• When selling, calculate gain based on ACB

Example: ACB Tracking

• Jan 2024: Mine 0.1 BTC (income $8,000, ACB $8,000)
• Mar 2024: Mine 0.05 BTC (income $5,000, ACB $5,000)
• Total: 0.15 BTC, ACB $13,000 (avg $86,667/BTC)
• Jun 2024: Sell 0.1 BTC for $10,000
• ACB sold: 0.1 × $86,667 = $8,667
• Capital gain: $10,000 - $8,667 = $1,333
• Taxable: $1,333 × 50% = $667

Selling Mined Crypto

Capital Gains Tax

When you sell mined coins:

• Capital gain/loss = proceeds - ACB
• 50% inclusion rate (only 50% is taxable)
• Report on Schedule 3
• Superficial loss rule applies

Full Tax Burden Example

• When mined: $8,000 business income (100% taxable)
• When sold: $2,000 gain ($1,000 taxable at 50% rate)
• Total economic value: $10,000
• First $8,000 taxed as business income, next $2,000 as capital gain

Tax Rates

Federal + Provincial Tax Rates (2024)

Capital gains taxed at 50% of these rates (inclusion rate)

How to Report

T1 Tax Return

Business miners:

1. T2125: Statement of Business Activities (mining income and expenses)
2. Schedule 3: Capital gains (if selling mined coins)
3. GST/HST return: If registered

Hobby miners:

1. Line 10400: Other employment income (mining income)
2. Schedule 3: Capital gains (if selling)

Deadlines

• Most Canadians: April 30
• Self-employed: June 15 (but payment due April 30)
• GST/HST: Quarterly or annually (depending on registration)

Record Keeping

Keep records for 6 years after filing:

• Mining pool statements (dates, amounts, CAD values)
• Wallet addresses and transaction IDs
• Equipment purchase invoices
• Electricity bills with business use calculation
• Repair and maintenance receipts
• Pool fees and software subscriptions
• ACB calculations for each crypto
• GST/HST records (if registered)

Tools for Mining Tax

• Koinly - Canada mining income, ACB tracking
• CoinTracker - Mining categorization
• TokenTax - Business income support

Common Mistakes

1. Not reporting mining income: CRA considers it taxable when received
2. Claiming business deductions for hobby: Only businesses can deduct expenses
3. Not tracking ACB properly: Must use average cost method (not FIFO)
4. Missing GST/HST registration: Required if mining income >$30,000
5. Forgetting superficial loss rule: Can't claim loss if repurchase within 30 days
6. Not claiming CCA strategically: Can defer to years with higher income
7. Using 100% capital gains treatment: Mining income is 100% taxable, only appreciation gets 50% rate

FAQs

Is crypto mining taxed as income in Canada?

Yes. Mining rewards are business or hobby income (100% taxable) at fair market value when received.

Do I pay tax when I mine or when I sell?

Both. Business/hobby income (100%) when mined, then capital gains (50% inclusion) when sold on any appreciation.

Is mining business income or hobby income?

Depends on profit motive and commercial manner. Most serious miners with dedicated equipment = business. Casual miners = hobby.

Can I deduct mining expenses?

Business: Yes, deduct electricity, equipment (CCA), and other expenses. Hobby: No deductions allowed.

Do I need to register for GST/HST?

Yes, if business mining income exceeds $30,000 in any 12-month period.

Can I claim CCA on mining equipment?

Yes, business miners can claim CCA (Class 50, 55% declining balance). First year is 27.5% due to half-year rule.

What if I mine at a loss?

Business: Can offset losses against other income. Hobby: Cannot deduct losses.

How do I track ACB for mined crypto?

Use average cost method. Each time you mine, add the income value to your ACB pool for that cryptocurrency.