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Crypto Capital Gains Questions

  • Last Updated:
  • May 9th, 2021 4:37 pm
[OP]
Member
Feb 18, 2013
251 posts
51 upvotes
Scarborough

Crypto Capital Gains Questions

2 questions I have that I would greatly appreciate some input on:

1. I recently sold some bitcoin which I held for 16 months for a gain. I have some other additional longer term crypto holdings, but I'm thinking I might try some shorter term trades where I'll buy and sell over a period of a week or so. Can the longer term trades be taxed as capital gains (50% of gain is taxed) and the shorter term trade be taxed as business income (100% of gains is taxed) or do they both need to be taxed as business income?

2. I want to make sure I understand how I will be taxed next year for the capital gain I made in part 1 (assuming I do not do any short term trading) so I want to include a (hypothetical) example to make sure I'm right. Let's say my non crypto taxable income for 2021 is exactly $98,040 and I had an additional 2021crypto capital gain (of which 50% is taxed at my marginal rate) of $50,000. I live in Ontario.
capital gains.jpg


Would the tax payable on the portion attributed to the crypto capital gain be:
$50,000 x 50% x 43.41% = $10,852.50
?
6 replies
Newbie
Feb 3, 2008
36 posts
33 upvotes
caddie444 wrote: 2 questions I have that I would greatly appreciate some input on:

1. I recently sold some bitcoin which I held for 16 months for a gain. I have some other additional longer term crypto holdings, but I'm thinking I might try some shorter term trades where I'll buy and sell over a period of a week or so. Can the longer term trades be taxed as capital gains (50% of gain is taxed) and the shorter term trade be taxed as business income (100% of gains is taxed) or do they both need to be taxed as business income?

2. I want to make sure I understand how I will be taxed next year for the capital gain I made in part 1 (assuming I do not do any short term trading) so I want to include a (hypothetical) example to make sure I'm right. Let's say my non crypto taxable income for 2021 is exactly $98,040 and I had an additional 2021crypto capital gain (of which 50% is taxed at my marginal rate) of $50,000. I live in Ontario.

capital gains.jpg



Would the tax payable on the portion attributed to the crypto capital gain be:
$50,000 x 50% x 43.41% = $10,852.50
?
For question 2, the tax on the portion attributed to the crypto capital gain would be $10 852.50.
[OP]
Member
Feb 18, 2013
251 posts
51 upvotes
Scarborough
Thanks for the confirmation. Does anyone have an answer to question #1? Thanks
Deal Addict
Jul 23, 2002
4697 posts
1164 upvotes
caddie444 wrote: Thanks for the confirmation. Does anyone have an answer to question #1? Thanks
Unlike the US, there's no defined criteria for long term and short term capital gains in Canada. The long term trades should definitely count as capital gains, you might have to report the short term trades as income if:

Image
Deal Fanatic
Jan 19, 2017
5595 posts
3131 upvotes
caddie444 wrote: 2 questions I have that I would greatly appreciate some input on:

1. I recently sold some bitcoin which I held for 16 months for a gain. I have some other additional longer term crypto holdings, but I'm thinking I might try some shorter term trades where I'll buy and sell over a period of a week or so. Can the longer term trades be taxed as capital gains (50% of gain is taxed) and the shorter term trade be taxed as business income (100% of gains is taxed) or do they both need to be taxed as business income?

2. I want to make sure I understand how I will be taxed next year for the capital gain I made in part 1 (assuming I do not do any short term trading) so I want to include a (hypothetical) example to make sure I'm right. Let's say my non crypto taxable income for 2021 is exactly $98,040 and I had an additional 2021crypto capital gain (of which 50% is taxed at my marginal rate) of $50,000. I live in Ontario.

capital gains.jpg



Would the tax payable on the portion attributed to the crypto capital gain be:
$50,000 x 50% x 43.41% = $10,852.50
?
First why you want to report as income which is 100% taxable while capital gain is 50% taxable. You can't have both ways, either as capital gain or income.
[OP]
Member
Feb 18, 2013
251 posts
51 upvotes
Scarborough
ml88888888 wrote: First why you want to report as income which is 100% taxable while capital gain is 50% taxable. You can't have both ways, either as capital gain or income.
I wouldn’t want to report as income, but if I have both short term AND long term investments my question was do they both have to be taxed the same? I was assuming that any short term trade had to be taxed as income... is this not true?
Deal Addict
Jul 23, 2002
4697 posts
1164 upvotes
caddie444 wrote: I wouldn’t want to report as income, but if I have both short term AND long term investments my question was do they both have to be taxed the same? I was assuming that any short term trade had to be taxed as income... is this not true?
Not necessarily in Canada.

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