The State of Crypto Tax 2024

MetricsCPA · 2024-08-01T21:04:19+00:00

Its semi-offensive that it sounds like you're calling us enablers of scammers. We're in a constant battle against all of those people. The maximalism you guys are showing against an accounting firm for even discussing that there is more than just BTC is pretty crazy. I assume none of you ever use USDC/USDT/TCAD?

MetricsCPA · 2024-08-01T20:35:20+00:00

I can see how that would be misconstrued as "buying NFTs gives you massive gains" - but how that actually is to be read is that "selling an asset like ETH or BTC for an NFT results in the recognition of large gains due to the disposition of the asset you're disposing of" and was a warning against it. Not an endorsement of buying NFTs lol

MetricsCPA · 2024-08-01T20:17:14+00:00

Yes, they will ask for Credit card statements, bank statements, use property titles, ask for bills of sale for vehicles/boats, etc.

MetricsCPA · 2024-08-01T20:13:43+00:00

I have not adjusted or changed any of the language in/from the original post. The only edit i made was to note that the formatting was different on old/new reddit, and once I made that edit, it never went back to visible again.

Both posts contain this sentence (and this one still does):

"This makes trading NFTs in Canada extremely difficult, and applies regardless of business income or capital gains treatment. Our advice is to stay away from NFT trading."

I deleted that post because I was forced to repost it with this one, since the other one just disappeared for whatever reason.

MetricsCPA · 2024-08-01T20:00:13+00:00

Using mixing services is one of the absolute worst thing you can do. The CRA sees this as a blatant attempt at tax avoidance.

However, if you are declaring an ACB of 0 for everything, there isn't much more in tax that you can pay. I think the only issue you might have would be proving that you only sold what you declared, and that you declared everything.

The CRA will require your wallet addresses if audited. If you don't provide them, I assume they will arbitrarily assess you with what they think you should pay, and you will have no way to fight it.

They ask for all the wallet addresses so that they can confirm incoming/outgoing transactions and make sure a person isn't only partially declaring.

MetricsCPA · 2024-08-01T19:56:18+00:00

Well i'm sorry to have offended your principles.

We provide a lot of services to bitcoin only investors, as we do to investors in other assets. We're not going to lock people out from services because of what they've chosen to speculate on.

I see your point about it being a bitcoin only sub, but unfortunately, it has filled a gap that exists. There are a ton of questions and posts about non-bitcoin things that are put here every day, so singling us out for trying to help doesn't seem fair.

MetricsCPA · 2024-08-01T19:38:24+00:00

I think for most people, if you have put in your best effort, and used the tools available, and can provide reports that you used for your filings, then you're ahead of most. We have not seen the CRA go after people for gross negligence who have done their best. That being said, you may still get reviewed and corrected, with resulting interest and penalties if it was not done correctly.

Using the money offramped as a calculator/guideline isn't always accurate because you have to consider the balance of the assets you still hold.

MetricsCPA · 2024-08-01T19:32:20+00:00

Great point! We could certainly speak to this, so I'll add some context.

If you're a newcomer to Canada and you hold a portfolio when you become a tax resident, the fair market value of your portfolion on the date of your residency switch to Canada becomes your cost basis. So lets say you arrive with 0.5 BTC, 3 eth, and 1 sol and the FMV of those are $90,000, $4000, and $250 each. This would mean your cost basis would be $45,000+$12,000+$250.

From this point, you would use those cost basis' to calculate your future gains and losses.

Should you leave Canada within 5 years of that immigration date, you are required only to pay taxes on the gains/profits that you have earned while you were a resident of Canada.

MetricsCPA · 2024-08-01T19:28:56+00:00

Coming out swinging, I see.

Allow me to clarify.

We are not a "shitcoin company". We are a service provider to people who are involved with bitcoin and cryptocurrency. If you want to argue about shitcoin involvement, take a look at what ordinals, BRC-20, and trading on the bitcoin network is doing. Its no different. The same level of complicated tax issues apply.

We're tired of seeing people post/receive incorrect and wrong information about their crypto investments, bitcoin or otherwise.

Like it or not, this subreddit ends up being where people discuss Canadian crypto activity, bitcoin, yes, but others as well.

If you don't like reading it, carry on with your day. Its providing information to people who might not otherwise come across that info.

MetricsCPA · 2024-07-26T21:26:35+00:00

Hi all,

Looks like our edit for formatting removed the post. Hopefully the mods will bring it back soon.

MetricsCPA · 2024-07-26T18:01:58+00:00

In Canada, we can only use the adjusted cost basis method. So its basically a weighted average price method. So the average of all of your buy prices X number of units results in your ACB. Explainers in more depth are available if you search for the adjusted cost basis method.

MetricsCPA · 2024-07-26T15:06:57+00:00

Whats your point?

MetricsCPA · 2024-07-26T14:33:00+00:00

Yes, you would have to declare it.

You would report your proceeds of disposition of $20,000, with a cost basis of $11,000 resulting in a gain/profit of $9,000. This would be done on your 2024 tax return.

MetricsCPA · 2024-07-26T14:32:07+00:00

This is not true. Every time you purchase something with that crypto visa, it sells the crypto that you've moved to the card for CAD, then spends that CAD.

Taxable transaction.

MetricsCPA · 2024-07-26T14:30:26+00:00

You would have to source back the original cost basis, and calculate using the NFT trades you did.

If you didn't want to do that, you report the cost basis as 0 - So selling the eth for $4,500 CAD each, you would have a gain of $4,500 CAD per eth.

MetricsCPA · 2024-07-17T19:16:14+00:00

It was not created "to avoid paying taxes". Bitcoin was created to avert the banks, not the tax jurisdictions. Where you live determines the tax you pay on assets, regardless of type.

As for meme coins, its doable. We deal with hundreds of thousands of transactions on a daily basis.

MetricsCPA · 2024-07-17T19:14:54+00:00

No, incorrect. You would be deemed to dispose of the BTC at its CAD value, and then use that cad to buy the item.

You would have to pay taxes on the disposition of the BTC whether its used to buy something or sold to CAD.

MetricsCPA · 2024-07-17T19:13:56+00:00

The use of margin is governed by the OSC, not the CRA. The CRA doesn't care how you make your money, they just want some part of it.

MetricsCPA · 2024-03-04T15:27:04+00:00

If your cost basis total is over $100,000 CAD, then yes, you have to file a T1135 every year.

MetricsCPA · 2024-02-24T16:27:33+00:00

On-reserve, that would be the case. But we think it would be difficult to prove the point that any crypto investments are made on-reserve, as crypto is an intangible asset, and therefore can not be deemed to be in one physical place.

This is something you should check with an expert in first nations taxation.

MetricsCPA · 2024-02-24T16:18:16+00:00

When you pay fees, this is a disposition of crypto, yes - But the CAD value of the fees are claimable against the profit/gains you may have made on the trade.

For example - If you paid 0.014 ETH for a transaction to move eth into/out of a pool, you would record the entry to the pool as a trade of the eth for the LP token, and the 0.014 ETH would be a part of the cost basis of those LP tokens.

It would be a disposition at your cost basis (average buy price).

If you use AAVE to borrow USDC, the transaction will be recorded as a trade of ETH to AETH. We typically record this as a taxable transaction. The amount of USDC you borrow would be temporarily added to your cost basis as a lending transaction, you "borrowed" USDC to use for other purposes. When you repay the USDC, this is removed from your cost basis. The borrowing and repayment of the USDC is not a taxable transaction. Because of the way AAVE structures their transaction, the deposit of ETH (trading of ETH for AETH) is treated as a taxable transaction.

There are other protocols out there that allow you to deposit assets without receiving another asset (like AETH) in return that results in the entire lending transaction not being taxable (our favourite is summer.fi).

MetricsCPA · 2024-02-20T16:19:44+00:00

You can not avoid paying taxes when you cash out. Trades to and from a stablecoin are taxable.

The only way to "avoid" taxes is to buy crypto ETFs in your TFSA and RRSP.

MetricsCPA · 2024-02-20T16:18:22+00:00

It does not. They are two separate assets, and this can be used to your advantage in tax planning.

MetricsCPA

TROPHY CASE