Cash Out Crypto Without Paying Taxes in Canada: Is it possible? (2024)

We’re nearly halfway through the year, but it’s never too early to start thinking about taxes.

If your crypto is moving up and you’ve seen gains, it might be a good time to think about how you’re going to handle your crypto taxes. Or, you might wonder how to cash out crypto without paying taxes in Canada.

There are several ways you can avoid paying taxes on your crypto in Canada. Keep in mind that the Canada Revenue Agency (CRA) will want to know exactly how much you’ve made so they can get their share. Is it possible to cash out without losing all your hard-earned digital assets?

While there’s no way to get your crypto without paying some taxes, there are a few ways to reduce your tax liability.

Before we get to that, we’ll take a look at some of the more common myths out there surrounding cryptocurrency taxes in Canada.

Myths about Crypto Taxes in Canada

Myths about Crypto Taxes in Canada

Here are a few common misconceptions about paying taxes on your cryptocurrency.

Myth 1; The Canada Revenue Agency cannot track your cryptocurrency

Most people believe that crypto is unregulated and anonymous. While that’s true for some digital assets – and it was originally the intention behind developing cryptocurrencies – the CRA has the legal right to obtain any user data from crypto exchanges regulated by Canada.

The CRA works with popular exchanges to track the movement and transactions of cryptocurrencies.

There are some that don’t submit to the CRA, but that’s likely to change in the coming months and years as the government seeks more regulation and control.

That means it’s important to track your crypto and pay your taxes on them. If you don’t, you could wind up owing the CRA for the actual balance plus an extra 50%.

Myth 2: NFTs don’t get taxed

NFTs don’t get taxed

Another popular myth about crypto taxes in Canada is that you don’t have to pay taxes on any NFTs (Non-fungible Token) you own.

If you use any earnings from your cryptocurrency to purchase an NFT, you’ll owe taxes on it. An NFT is not a safe haven for your taxable income or capital gains.

For example, if you buy crypto and its value doubles you might be tempted to do something with your profit.

Purchasing an NFT is the same as moving it to your bank account. Once you realize that profit, you’ll have to pay taxes on that capital gain.

Myth 3: Give crypto to your family or friends without paying taxes

The important thing to remember about crypto taxes in Canada is that more often than not, the CRA will treat your cryptocurrency in much the same way they treat stocks.

Crypto profits behave much in the same way as capital gains. So, if you sell the crypto for more than you bought it, the CRA considered this a taxable event.

For some unknown reason, there are people out there who believe that you can transfer your crypto tax-free to a family or friend. This is most assuredly not the case if you’re Canadian.

You are responsible for reporting the taxes on any and all transactions that involved cryptocurrency, which includes any you sent to friends or family.

Of course, the thing to keep in mind is that you only pay taxes on 50% of those capital gains, in most cases.

If you profited $100, you’ll only owe the CRA taxes on $50. While it might not be the tax break you were looking for, it’s not a bad start.

How to Cash Out Crypto Without Paying Taxes in Canada

So, what are some ways you can cash out your crypto without paying taxes on them in Canada? Let’s look at some of your options.

Use crypto ETFs

ETFs (Exchange Traded Funds) are a great way to get into the crypto game without actually owning crypto. An ETF is an investment vehicle that mimics the price and performance of a specific asset.

In the case of a crypto ETF, it tracks how the digital asset – such as Bitcoin – behaves in the market.

The difference is that you don’t actually own the Bitcoin. Basically, you’re speculating on the gains and losses of the asset without holding the asset itself.

This is an appealing tactic for those that want to invest in an asset over the long haul, but don’t want to mess with storing their crypto in a wallet.

Put your registered retirement plan to good use

You can hold most crypto ETFs in your TFSA or RRSP, which can help to either eliminate or defer your taxes to a later date.

Remember you’ll have to pay taxes when you withdraw from your RRSP, but you’ll likely be in a lower tax bracket after you retire.

Keep in mind that you are limited to the amount you can contribute to your RRSP or TFSA, so be sure you haven’t hit the maximum before you contribute.

Behave as an individual investor

When it comes to crypto, the CRA taxes it as either a capital gain or as income tax. Your taxes will be much lower if it is determined to be a capital gain. The determining factor is whether the activities denote someone behaving as an individual investor or as a business.

Each case is different and the CRA treats them as such. However, there are a few things you can do to ensure you get taxed as an individual investor.

For starters, don’t promote a product or service. Doing so tips off the CRA that you’re probably a business.

Additionally, try not to invest as a business. This means avoiding any activities that would suggest you’re not an individual investor. Last, don’t invest for commercial purposes.

If the CRA determines that you have an individual investor, you’re only going to pay taxes on half your capital gains profits.

However, if you’re taxed as a business, you’ll pay income tax on everything you earned.

Use Your Losses to Offset your gains

The only time you realize a capital gain is if you spend, trade, gift, or sell your cryptocurrency.

However, the gain only applies to crypto that has increased in value. If it decreases and you perform a transaction, then you wind up with an unrealized loss.

With a crypto tracker, you can track these losses and use them to offset your gains. This is really helpful if you know you may be up against a rather significant tax bill.

Use some of your crypto that isn’t performing so well. This is also known as harvesting your losses and is beneficial in reducing your crypto taxes.

If you wind up with more losses than gains, you can use those losses to pay for future and past taxes. This can be done indefinitely moving forward, but you can only apply those losses to the previous three years’ worth of taxes.

Hold on for dear life

You’ll often see this phrase in the form of the acronym HODL in crypto circles. This is the easiest way to avoid taxes on your crypto. Of course, you can’t cash out your crypto if you don’t sell it, spend it, or gift it to someone.

But you don’t pay any taxes on it. HODLing is the easiest way to avoid paying taxes on your crypto.

Frequently Asked Questions

Frequently Asked Questions

Let’s take a quick look at some commonly asked questions about crypto taxes in Canada.

Do I have to pay taxes on my crypto?

The CRA has said that you need to report any and all crypto transactions when filing your taxes. This includes any gains or losses from buying, selling, or spending crypto.

So, if you’ve made any profits from your crypto holdings, the CRA expects you to report those as capital gains.

How are crypto taxes calculated in Canada?

The CRA taxes crypto as either a capital gain or income tax. The determining factor is whether you’re behaving as an individual investor or as a business.

If you’re treated as an individual investor, you’ll only pay taxes on half your capital gains profits. However, if you’re taxed as a business, you’ll pay income tax on everything you earned.

What if I don’t pay my crypto taxes?

The CRA has said that they will treat crypto just like any other asset when it comes to taxes. This means you could be subject to interest and penalties if you don’t pay your taxes.

Additionally, the CRA could launch an audit of your finances, which is never a fun experience.


Unfortunately, there is no legal way to cash out crypto without paying taxes in Canada. Since cryptocurrencies are viewed as commodities by the CRA, any transaction involving crypto is subject to tax as either income or capital gains.

Plus, since the CRA can request data from nearly any exchange doing business in Canada, it will have access to your crypto transactions anyway.

Using the methods above will help reduce your overall tax liability, but if you’re a resident of Canada, you’ll have to pay taxes on your crypto in one form or another.

Photo of author
Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Read about how he quit his 6-figure salary career to travel the world here.

Check Out These Posts:

Leave a Comment