Canada Crypto Staking Tax Guide 2025

What is Crypto Staking?

Crypto staking involves locking cryptocurrency to validate blockchain transactions in exchange for rewards. Common examples include:

• Ethereum (ETH): Solo staking or using services (Lido, Rocket Pool)
• Cardano (ADA): Delegating to stake pools
• Polkadot (DOT): Nominating validators
• Solana (SOL): Validator delegation
• Canadian exchanges: NDAX, Bitbuy, Coinbase, Kraken

CRA Treatment of Staking Rewards

The CRA treats staking rewards as income when received, not capital gains. The classification depends on your activities:

Business Income vs Investment Income

Staking rewards can be either:

1. Business income (most common): If staking is part of regular cryptocurrency trading/investing activities
2. Investment income: If purely passive with no other crypto trading

Key difference: Business income allows expense deductions; investment income does not.

CRA Guidance

While the CRA hasn't issued specific staking guidance, general principles apply:

• Rewards = income at fair market value when received
• 100% taxable (unlike capital gains at 50%)
• Must be reported on T1 return
• Cost basis = income value for future capital gains

When Are Staking Rewards Taxable?

Staking rewards are taxable when you receive them and have control:

Exchange Staking

Staking through Canadian or international exchanges:

• Taxable date: When rewards credited to your account
• FMV: CAD value on that date
• Frequency: Daily, weekly, or per distribution

Solo Staking (ETH Validator)

Running your own validator:

• Taxable date: When rewards earned (per-epoch)
• Tracking: Must track potentially thousands of micro-rewards
• Business income: Likely classified as business (allows expense deductions)

Liquid Staking (stETH, rETH)

• Lido (stETH): Daily rebases likely taxable
• Rocket Pool (rETH): Appreciation may not be income until redeemed
• CRA uncertainty: No specific guidance yet

How to Calculate Staking Income

Step 1: Determine Fair Market Value in CAD

Example: Receive 0.05 ETH on March 15, 2025 when ETH = $4,000 CAD

• FMV = 0.05 × $4,000 = $200 CAD income

Step 2: Track All Rewards

Tax Rates (2025)

Combined Federal + Provincial Rates

Staking income is taxed at your marginal rate (federal + provincial):

Federal Tax Brackets (2025)

How to Report on T1 Return

Business Income (Most Common)

If staking is part of regular crypto activities:

1. Report on Line 10400 - Business income
2. Complete Form T2125 (Statement of Business Activities)
3. Report gross staking income
4. Deduct eligible expenses (hardware, electricity, internet for validators)

Investment Income (Rare)

If purely passive with no trading:

1. Report on Line 12100 - Investment income
2. No expense deductions allowed

ACB (Adjusted Cost Base) Tracking

What is ACB?

ACB = average cost of all identical cryptocurrency holdings. When you receive staking rewards:

• Add reward amount to your holdings
• Add income value to total ACB
• Recalculate average cost per unit

ACB Calculation Example

Initial holdings:

• 10 ETH purchased at $3,000 CAD each
• Total ACB = $30,000
• ACB per ETH = $3,000

Receive staking reward:

• 0.5 ETH when ETH = $4,000
• Income = $2,000

New ACB:

• Total holdings = 10.5 ETH
• Total ACB = $30,000 + $2,000 = $32,000
• New ACB per ETH = $32,000 / 10.5 = $3,047.62

Capital Gains When You Sell

Example (continued):

• Sell 1 ETH when ETH = $4,500
• Proceeds = $4,500
• ACB = $3,047.62
• Capital gain = $4,500 - $3,047.62 = $1,452.38
• Taxable gain = $1,452.38 × 50% = $726.19

Capital Gains Treatment

50% Inclusion Rate

When you sell staking rewards:

• Only 50% of capital gains are taxable
• Report on Schedule 3 of T1 return
• Much more favorable than 100% taxable income

Superficial Loss Rule

If you sell at a loss and repurchase within 30 days:

• Capital loss is denied
• Loss added to ACB of repurchased crypto
• Applies to you and affiliated persons (spouse, controlled corporations)

Example Scenarios

Scenario 1: NDAX Staking

You stake 10 ETH on NDAX at 4% APY.

• Annual rewards: 0.4 ETH
• Average price: $4,000 CAD

Tax treatment:

• Income: 0.4 × $4,000 = $1,600 (100% taxable)
• Report on Line 10400 (business income)
• Tax at marginal rate: ~$480-$850 depending on province
• Add to ACB: 0.4 ETH at $1,600 cost

Scenario 2: ETH Solo Validator

You run an Ethereum validator with 32 ETH.

• Annual rewards: ~1.2 ETH
• Total income: ~$4,800 (at $4,000 avg)
• Expenses: Hardware ($2,000), electricity ($600), internet ($480)

Tax treatment:

• Gross income: $4,800
• Expenses: $3,080
• Net business income: $1,720
• Report on Form T2125
• Tax at marginal rate

Deductible Expenses (Business Income)

If staking qualifies as business income, you may deduct:

Solo Validators

• Hardware: Computer/server (capital cost allowance)
• Electricity: Portion used for validator
• Internet: Portion used for validator
• Software/subscriptions: Monitoring tools, tax software
• Home office: Portion of rent/utilities if dedicated space

Exchange Stakers

Generally no expenses deductible if using exchange staking services.

Record Keeping

CRA requires records for 6 years from the end of the tax year.

What to Track

• Date and time of each reward
• Amount in crypto
• CAD value at time of receipt
• Exchange/wallet used
• ACB calculations after each reward
• Expense receipts (if business income)

Recommended Tools

• Koinly - Excellent ACB tracking
• TokenTax - CRA-compliant reports
• CoinTracker - Good for Canadian users

Common Mistakes

1. Not reporting staking income: CRA requires 100% income reporting
2. Treating as capital gains: Income at receipt (not 50% inclusion)
3. Wrong CAD valuation: Use price at time of receipt
4. Incorrect ACB tracking: Must update ACB with each reward
5. Missing expense deductions: Business income allows deductions
6. Ignoring superficial loss rule: 30-day repurchase rule

FAQs

Is staking income or capital gains in Canada?

Income when received (100% taxable), then capital gains when sold (50% inclusion rate).

Do I pay tax twice on staking rewards?

No. Income tax when received, capital gains tax on appreciation when sold. ACB prevents double taxation.

Can I use FIFO or LIFO instead of ACB?

No. Canada requires ACB (average cost) method for identical properties. FIFO/LIFO not allowed.

What if I can't access locked staking rewards?

Likely still taxable when earned, similar to IRS treatment. Conservative approach is to report when earned.

Can I deduct staking losses?

Income losses: Deductible against other income if business income.Capital losses: Only deductible against capital gains, subject to superficial loss rule.

Is staking considered business or investment income?

Usually business income if you're actively trading crypto. Investment income only if purely passive with no other crypto activity.

Do I need to report staking under $100?

Yes. All income must be reported regardless of amount.

CRA Resources

• CRA - Digital Currency
• IT-479R - Transactions in Securities

Final Thoughts

Canadian staking tax involves 100% income inclusion at receipt followed by favorable 50% capital gains treatment at sale. The ACB system is mandatory but straightforward with crypto tax software. Business income classification allows expense deductions for solo validators, providing meaningful tax relief.

Provincial tax rates significantly impact total tax liability — Albertans pay ~48% top rate while Ontarians pay ~53.5%. For stakers earning $5,000+ annually, working with a crypto-savvy accountant ensures optimal tax treatment and proper expense deductions.