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Unfiled Crypto Tax Solutions

Crypto Tax Audit Assistance

A CRA tax audit can be triggered if you don’t file your NFT or crypto taxes. CRA tax audits can be both intimidating and expensive, but a crypto tax lawyer can help you minimize your costs if the CRA is auditing your records.

Correcting Crypto Tax Mistakes

There may be penalties associated with back taxes even if you correct a crypto tax mistake by reporting crypto gains later on. A crypto tax lawyer will help you correct crypto tax mistakes and mitigate the penalties.

Crypto Tax Reporting

Do you know whether you should report NFTs and crypto on your taxes as a capital gain or business income? Get crypto tax tips from a crypto tax lawyer who can help you report Bitcoin and all other cryptocurrencies to the CRA.

Voluntary Disclosure Program

The Voluntary Disclosure Program is a relief program for unfiled or inaccurate taxes. If you don’t report NFTs or crypto on your taxes, you can correct that mistake with the VDP with more favourable repayment terms than if the CRA found the inaccuracies themselves.

How to File Crypto Taxes

Identify the Tax Due Date for the Year

The tax due date for the year is different for corporations than it is for individuals. If you are trading NFTs or cryptocurrency through an incorporated business, your filing due date is no later than six months after the end of your tax year.

Business Income or Capital Gain?

How you report crypto gains or losses can affect the rate at which it’s taxed. You may have to report crypto on your taxes as either business income or capital gains, depending on the nature of your crypto transactions.

Reporting Crypto Tax As Business Income

Conducting NFT and crypto transactions as part of business activity with the intention of making a profit means you must report crypto gains as business income. This means the entire gain is considered taxable income.

Reporting Crypto Tax As Capital Gain

When you report crypto taxes as capital gains, only half of the amount is taxable, and gains can be offset by claimed capital losses. If the sale of cryptocurrency does not constitute a business, you can claim crypto on your taxes as capital gains.

Trading Cryptocurrency

Trading one cryptocurrency for another is still a taxable event. When you trade one cryptocurrency for another, the transaction is considered a disposition. It must be reported on your income tax return using the fair market value of the currency at the time of the disposition.

Reporting Cryptocurrency Earnings Through Mining or Staking

Cryptocurrency earnings through mining or staking must also be reported on your taxes. The income tax treatment depends on whether mining is conducted as a business activity or a personal activity. This is determined on a case-by-case basis.

Bookkeeping & Recordkeeping

Any time you acquire or dispose of cryptocurrency, you are responsible for keeping records of your cryptocurrency transactions. You must keep a record of all cryptocurrency exchanges for at least six years.

GST & HST Applications

When you make a purchase with cryptocurrency or accept cryptocurrency as payment in exchange for goods or services, GST or HST must still be paid on the transaction. The value of cryptocurrency for GST/HST is calculated based on fair market value at the time of the transaction.

Crypto Tax Returns

Talk to a crypto tax lawyer to learn how to report crypto on your taxes, crypto tax planning, reporting capital gains or losses, and what to do if you have unreported crypto taxes from previous years.

Frequently Asked Questions About Unfiled Crypto Taxes

Do I have to report crypto on taxes?

Cryptocurrency is a digital asset. For taxation purposes, the CRA treats digital assets as commodities. All income from cryptocurrency transactions must be reported on your taxes and will be treated as either business income or capital gains (or losses). If you do not report cryptocurrency on taxes, you can wind up owing back taxes and facing harsh penalties from the CRA.

Do I need to report crypto if I lost money?

When you lose money in a cryptocurrency transaction, you may be able to claim crypto on your taxes as a capital loss. Capital losses can be used to offset capital gains earned from other transactions. If you have to claim crypto on your taxes as business income, it can also be reported as a business loss. With the right crypto tax plan, you can use reported losses to offset your tax bill.

Do you have to report crypto gains?

Every time you earn income from an investment, it must be reported to the CRA and taxed accordingly, including NFTs and cryptocurrency. You must report business income or capital gains from any disposition of NFT or cryptocurrency. Disposition refers to a way of getting rid of something, i.e., giving, selling, or transferring it. This includes selling cryptocurrency or giving it as a gift, buying goods or services with cryptocurrency, converting one cryptocurrency for another, or converting it to a government-issued currency.

Do I need to report crypto if I didn’t sell?

As a general rule, holding NFTs and cryptocurrency is not taxable. As with other assets, you only need to report crypto on taxes if you earn income from a transaction. While this includes more than just selling cryptocurrency, it usually does not mean possessing the asset. It is important to realize that a crypto to crypto exchange is considered to be a sale and any gain has to be reported. Furthermore, if you earn income in cryptocurrency, such as mining Bitcoin or accepting payment for a job in Bitcoin, this could be considered taxable income.

How much crypto do I have to report?

Although you do not have to report crypto that you possess, you have to report all the income that you gain from crypto transactions within a tax year on that year’s tax filing. The amount you earn from trading cryptocurrency can affect both your marginal tax rate and whether that income is considered a capital gain or business income.

What are unfiled crypto tax returns?

Any income that you do not report on your taxes is unfiled. If you forgot to report crypto on taxes, you could face penalties from the CRA and owe back taxes on unreported transactions. You can go back to file unreported income, and there are ways to avoid the penalties that come with it.

What are the penalties for not claiming crypto on taxes?

False or repeated failure to report income to the CRA can come with strict penalties. False statements or omissions on your tax return can result in a penalty of 50% of the understated tax or overstated credits related to the false statement, adding to the amount you will have to pay the CRA. You can receive relief from these penalties through the Voluntary Disclosure Program.

What happens if I forgot to report crypto on taxes?

Honest mistakes can always be corrected, even when it comes to taxes and the CRA. Many people are not aware that they need to report cryptocurrency on their taxes when they get started in crypto. If you forgot to report crypto on your taxes, the Voluntary Disclosure Program can help you avoid penalties.

Is not filing crypto taxes a crime?

Under the Income Tax Act, tax evasion is a crime that can come with steep fines or even jail time. If you filed your taxes incorrectly, did not declare income or expenses correctly, or did not file returns at all, there are proactive steps you can take to avoid the harshest penalties.

How can I avoid penalties for my unfiled crypto taxes?

The Voluntary Disclosure Program (VDP) is a CRA policy that allows taxpayers who have to correct or make changes to tax returns that they have already filed. They can reveal information not previously provided to the CRA without facing prosecution. Crypto taxes, which are considered either business income or capital gains, are reported as part of your income taxes and are therefore eligible for the VDP.

What is tax prosecution?

Tax prosecution can be lodged against you if the CRA believes you have filed a false or misleading statement, failed to file your taxes at all, or because of tax evasion. If any of these tax prosecutions are lodged against you, contact your tax insurance lawyer immediately.

What are the benefits of the CRA Voluntary Disclosure Program for my crypto taxes?

Proactively applying for the CRA Voluntary Disclosure Program will help you avoid criminal tax evasion charges and penalties for gross negligence. While you will still have to pay what you owe the CRA, you can avoid the harshest penalties that come from unreported income.

"These articles provide information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."

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