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Canada is one of the rising hubs for the crypto industry with more than 1.2 million people owning crypto. But what happens when it's time to cash out the cryptocurrency?
Whether you're looking to sell a portion of your bitcoins or cash out your crypto completely, it's crucial to know the right approach. With so many options available and new regulations being introduced every year, it can be challenging to know where to start.
In this guide, you'll find everything you need to know about cashing out crypto in Canada without paying more taxes in 2023 so that you can enjoy the value of your assets with confidence.
Before we dive into how to cash out your cryptocurrency in Canada, it's important to understand when you have to pay taxes on your crypto.
The Canada Revenue Agency (CRA) considers cryptocurrency as a commodity which is subject to tax. Any profits gained from cryptocurrency transactions are taxable as:
How you will be taxed by the CRA depends on whether you are conducting these transactions as a business or as an individual investor.
Here are some of the following signs that can make you seen as a business:
Whether you will be treated as a business or not is decided on a case-by-case basis by the CRA. If your crypto income falls under business income, you will have to pay taxes on 100% of your profits. If you are an individual investor, you will pay taxes on 50% of your capital gains.
You may be subject to crypto taxes if you:
You are probably wondering about the best options to cash out your bitcoin or other cryptocurrencies.
Here are the top 4 ways to consider for cashing out your crypto in Canada.
One of the easiest ways to cash out your cryptocurrency in Canada is by selling it on a cryptocurrency exchange. These are online platforms where you can trade your cryptocurrencies for fiat (e.g. Canadian dollars) or another crypto.
Some popular exchanges operating in Canada include Coinbase, Bitbuy, and Gemini. However, crypto exchanges charge a certain fee for your transactions which may vary across platforms.
If you are not sure how to trade your crypto directly on an exchange, a convenient option is to use a cryptocurrency broker service to trade your crypto.
These brokers act as intermediaries between buyers and sellers and help you sell your cryptocurrency at a good price. All you have to do is enter the amount of crypto you want to trade and the currency you want to receive.
Several exchanges provide cryptocurrency broker services in Canada including NDAX and Netcoins. The charged fee is on the higher side than exchanges but you get more convenient services.
Bitcoin ATM is one of the easiest ways to cash out your cryptocurrency, simply by entering your wallet’s public address or scanning a QR code. You can also buy bitcoin using cash or digital transfers which will be delivered to your wallet. As of 2022, Canada has around 1,051 Bitcoin ATMs.
It may take anywhere from a few minutes to several hours to complete these transactions on the blockchain. Once your bitcoins are sold, you can receive physical cash or send the fiat amount to a digital wallet.
The machines are costly to use and come with transaction limits. Consider this before you sell your bitcoin through these ATMs to get the best value for your assets.
Peer-to-peer marketplaces is the best way to sell your cryptocurrency directly with traders from the same jurisdiction. This lets you trade in the same currency, avoiding any fluctuations in exchange rates.
Some popular peer-to-peer marketplaces in Canada like LocalBitcoins or Paxful connect buyers and sellers directly for cryptocurrency trades.
Since you are trading your crypto directly and not through any intermediary, you can set your own terms for the trades, for instance, the price at which you want to trade your crypto.
However, it is essential to be cautious when trading on these marketplaces and only deal with reputable buyers and sellers.
While it’s not legally possible to cash out crypto without paying taxes in Canada, there are several tricks to minimise your crypto tax bills. Let’s look at each of them in detail.
Canada has a capital gains tax, which means that you will be taxed on the gains you make when you dispose of your cryptocurrency.
However, if you hold onto your cryptocurrency, you can enjoy the appreciating value of your assets without paying any taxes on them.
You can realise the profits earned on your assets in a low-income year to avoid taxes completely for up to $14,398 of income.
As per CRA, there are two types of taxes applicable on crypto: business income and capital gains. If the gains from your trades qualify as business income, you are taxed on 100% of your profits. Whereas, if you are an individual investor, you only pay taxes on 50% of your profits.
Although there are no defined rules on how to be seen as an investor by the CRA, it’s a good idea to avoid repetitive investments and short-term gains.
If you have incurred losses in your cryptocurrency investments, you can use them to offset your capital gains and reduce your tax liability. This is known as tax-loss harvesting.
This involves selling your losing investments to offset the gains you have made in a given financial year. You can use a crypto tax software like Kryptos to automatically find any tax-loss harvesting opportunities in your portfolio throughout the year and reduce your overall tax bill.
Another way to cash out your cryptocurrency without paying taxes is by using–
Instead of directly disposing of your crypto that is subject to capital gains tax, you can take a loan against your crypto assets which is not considered a taxable event.
However, your assets may be liquefied if the crypto value drops significantly. Consider all market-related risks before opting for a crypto loan.
You can cash out your cryptocurrency in Canada using the above ways such as selling it on an exchange or using Bitcoin ATMs. However, it is essential to be aware of the tax implications of these transactions and to explore options to reduce your tax liability.
Keeping track of all of this manually is possible, but you may miss out on taxes or overpay them. Kryptos lets you track all your crypto transactions automatically – identifying tax-saving opportunities, preventing calculation errors, and managing your crypto taxes automatically.
You can also generate tax reports as per the guidelines defined by the CRA. All you need to do is add your wallet’s public address to the platform and let it automatically manage your crypto portfolio and applicable taxes. To learn more, Sign Up Now for free.
1. What is the cheapest way to withdraw crypto from Canada?
The cheapest way to cash out your crypto in Canada is to use exchanges with minimal fees to sell your assets. Exchanges like Coinberry charge no funding and withdrawal fees while Bitbuy charges only 0.1% to 0.2% fees while selling your bitcoin and 1% withdrawal fees.
2. How do I cash out my crypto for cash?
There are primarily four ways to cash out your crypto in Canada: crypto exchange, crypto brokers, bitcoin ATMs, and peer-to-peer marketplaces.
3. How do I avoid crypto tax in Canada?
While there’s no legal way to completely avoid taxes in Canada, you can use these tips to save taxes on your crypto transactions:
4. Is crypto income taxable in Canada?
Crypto is viewed as a commodity by the CRA and any income from the disposal of crypto is subject to two types of taxes: capital gains tax and business income.
5. How do I cash out a large amount of crypto in Canada?
The most convenient way to cash out your crypto is to use crypto exchanges or brokers. However, they charge you a specific fee which is generally a percentage of your transaction amount.
All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!
| Country | Issue | Kryptos Use Case |
|---|---|---|
| India | Cryptocurrency transactions are taxed as capital gains, with evolving legislation creating uncertainty. | Kryptos.io streamlines the process by automatically tracking transactions and computing capital gains, adjusting to new regulations for precise reporting. |
| Brazil | Cryptocurrencies are subject to capital gains tax and must be reported, posing challenges with complex requirements. | Kryptos.io simplifies compliance by offering real-time transaction tracking and detailed tax calculations, making it easier to meet Brazil’s tax obligations. |
| Nigeria | Regulatory framework for cryptocurrencies is evolving, with uncertainty around taxation and restrictions from the Central Bank. | Kryptos.io provides an adaptable solution by maintaining detailed records and generating flexible reports, helping users stay compliant despite regulatory changes. |
| USA | Cryptocurrency transactions are subject to capital gains tax, with detailed IRS reporting requirements. | Kryptos.io enhances compliance by automating the tracking of transactions and generating comprehensive tax reports, facilitating adherence to IRS requirements. |
| UK | Cryptocurrencies are taxed under both capital gains tax and income tax, requiring careful tracking and reporting. | Kryptos.io aids UK users by monitoring both capital gains and income from crypto transactions, ensuring accurate and straightforward tax reporting. |
| Australia | Cryptocurrencies are subject to capital gains tax, and users must report their gains and losses to the ATO. | Kryptos.io assists Australian users by providing seamless transaction tracking and precise capital gains calculations, ensuring efficient compliance with ATO reporting requirements. |
| Germany | Cryptocurrencies are taxed as private assets with gains subject to tax if held for less than a year. | Kryptos.io supports German users by tracking holding periods and computing taxes on cryptocurrency transactions, ensuring adherence to German tax regulations. |
| Japan | Cryptocurrency gains are treated as miscellaneous income and are subject to high tax rates. | Kryptos.io helps Japanese users by offering a detailed tracking system and calculating taxes on miscellaneous income, efficiently managing high tax obligations. |
| Scenario | Description | Kryptos Features that can be of aid |
|---|---|---|
| Multiple Exchanges and Wallets | Consolidating records from various exchanges and wallets to maintain a comprehensive overview of crypto activities. | Seamless integration with numerous exchanges and wallets, automatic import, and consolidation of records. |
| International Transactions | Managing records for cross-border transactions, including currency conversions and compliance with international tax laws. | Support for multiple currencies, efficient management of cross-border activities, accurate currency conversion for reporting. |
| Complex Transactions | Handling trades, swaps, staking, lending, and other sophisticated crypto activities. | Advanced tracking, reporting, and documentation for various transaction types. Kryptos' DeFi and NFT modules offer specialized tools for managing decentralized finance and NFT activities, ensuring precise records and comprehensive oversight. |
As Web3 evolves, managing a diverse portfolio has become complex. Kryptos simplifies this with advanced tools for real-time tracking, NFT management, and DeFi analytics. Discover how Kryptos turns challenges into strategic advantages for modern investors.
Struggling with crypto tax in Australia? Kryptos.io simplifies the process, ensuring accurate and compliant filings with the ATO. Track transactions and value assets effortlessly—make tax season stress-free.
Mastering Crypto Taxation: Navigate the Complex World of Digital Assets with Kryptos, the Ultimate Solution for Accurate, Efficient, and Future-Proof Tax Reporting.
Canada is one of the rising hubs for the crypto industry with more than 1.2 million people owning crypto. But what happens when it's time to cash out the cryptocurrency?
Whether you're looking to sell a portion of your bitcoins or cash out your crypto completely, it's crucial to know the right approach. With so many options available and new regulations being introduced every year, it can be challenging to know where to start.
In this guide, you'll find everything you need to know about cashing out crypto in Canada without paying more taxes in 2023 so that you can enjoy the value of your assets with confidence.
Before we dive into how to cash out your cryptocurrency in Canada, it's important to understand when you have to pay taxes on your crypto.
The Canada Revenue Agency (CRA) considers cryptocurrency as a commodity which is subject to tax. Any profits gained from cryptocurrency transactions are taxable as:
How you will be taxed by the CRA depends on whether you are conducting these transactions as a business or as an individual investor.
Here are some of the following signs that can make you seen as a business:
Whether you will be treated as a business or not is decided on a case-by-case basis by the CRA. If your crypto income falls under business income, you will have to pay taxes on 100% of your profits. If you are an individual investor, you will pay taxes on 50% of your capital gains.
You may be subject to crypto taxes if you:
You are probably wondering about the best options to cash out your bitcoin or other cryptocurrencies.
Here are the top 4 ways to consider for cashing out your crypto in Canada.
One of the easiest ways to cash out your cryptocurrency in Canada is by selling it on a cryptocurrency exchange. These are online platforms where you can trade your cryptocurrencies for fiat (e.g. Canadian dollars) or another crypto.
Some popular exchanges operating in Canada include Coinbase, Bitbuy, and Gemini. However, crypto exchanges charge a certain fee for your transactions which may vary across platforms.
If you are not sure how to trade your crypto directly on an exchange, a convenient option is to use a cryptocurrency broker service to trade your crypto.
These brokers act as intermediaries between buyers and sellers and help you sell your cryptocurrency at a good price. All you have to do is enter the amount of crypto you want to trade and the currency you want to receive.
Several exchanges provide cryptocurrency broker services in Canada including NDAX and Netcoins. The charged fee is on the higher side than exchanges but you get more convenient services.
Bitcoin ATM is one of the easiest ways to cash out your cryptocurrency, simply by entering your wallet’s public address or scanning a QR code. You can also buy bitcoin using cash or digital transfers which will be delivered to your wallet. As of 2022, Canada has around 1,051 Bitcoin ATMs.
It may take anywhere from a few minutes to several hours to complete these transactions on the blockchain. Once your bitcoins are sold, you can receive physical cash or send the fiat amount to a digital wallet.
The machines are costly to use and come with transaction limits. Consider this before you sell your bitcoin through these ATMs to get the best value for your assets.
Peer-to-peer marketplaces is the best way to sell your cryptocurrency directly with traders from the same jurisdiction. This lets you trade in the same currency, avoiding any fluctuations in exchange rates.
Some popular peer-to-peer marketplaces in Canada like LocalBitcoins or Paxful connect buyers and sellers directly for cryptocurrency trades.
Since you are trading your crypto directly and not through any intermediary, you can set your own terms for the trades, for instance, the price at which you want to trade your crypto.
However, it is essential to be cautious when trading on these marketplaces and only deal with reputable buyers and sellers.
While it’s not legally possible to cash out crypto without paying taxes in Canada, there are several tricks to minimise your crypto tax bills. Let’s look at each of them in detail.
Canada has a capital gains tax, which means that you will be taxed on the gains you make when you dispose of your cryptocurrency.
However, if you hold onto your cryptocurrency, you can enjoy the appreciating value of your assets without paying any taxes on them.
You can realise the profits earned on your assets in a low-income year to avoid taxes completely for up to $14,398 of income.
As per CRA, there are two types of taxes applicable on crypto: business income and capital gains. If the gains from your trades qualify as business income, you are taxed on 100% of your profits. Whereas, if you are an individual investor, you only pay taxes on 50% of your profits.
Although there are no defined rules on how to be seen as an investor by the CRA, it’s a good idea to avoid repetitive investments and short-term gains.
If you have incurred losses in your cryptocurrency investments, you can use them to offset your capital gains and reduce your tax liability. This is known as tax-loss harvesting.
This involves selling your losing investments to offset the gains you have made in a given financial year. You can use a crypto tax software like Kryptos to automatically find any tax-loss harvesting opportunities in your portfolio throughout the year and reduce your overall tax bill.
Another way to cash out your cryptocurrency without paying taxes is by using–
Instead of directly disposing of your crypto that is subject to capital gains tax, you can take a loan against your crypto assets which is not considered a taxable event.
However, your assets may be liquefied if the crypto value drops significantly. Consider all market-related risks before opting for a crypto loan.
You can cash out your cryptocurrency in Canada using the above ways such as selling it on an exchange or using Bitcoin ATMs. However, it is essential to be aware of the tax implications of these transactions and to explore options to reduce your tax liability.
Keeping track of all of this manually is possible, but you may miss out on taxes or overpay them. Kryptos lets you track all your crypto transactions automatically – identifying tax-saving opportunities, preventing calculation errors, and managing your crypto taxes automatically.
You can also generate tax reports as per the guidelines defined by the CRA. All you need to do is add your wallet’s public address to the platform and let it automatically manage your crypto portfolio and applicable taxes. To learn more, Sign Up Now for free.
1. What is the cheapest way to withdraw crypto from Canada?
The cheapest way to cash out your crypto in Canada is to use exchanges with minimal fees to sell your assets. Exchanges like Coinberry charge no funding and withdrawal fees while Bitbuy charges only 0.1% to 0.2% fees while selling your bitcoin and 1% withdrawal fees.
2. How do I cash out my crypto for cash?
There are primarily four ways to cash out your crypto in Canada: crypto exchange, crypto brokers, bitcoin ATMs, and peer-to-peer marketplaces.
3. How do I avoid crypto tax in Canada?
While there’s no legal way to completely avoid taxes in Canada, you can use these tips to save taxes on your crypto transactions:
4. Is crypto income taxable in Canada?
Crypto is viewed as a commodity by the CRA and any income from the disposal of crypto is subject to two types of taxes: capital gains tax and business income.
5. How do I cash out a large amount of crypto in Canada?
The most convenient way to cash out your crypto is to use crypto exchanges or brokers. However, they charge you a specific fee which is generally a percentage of your transaction amount.
All content on Kryptos serves general informational purposes only. It's not intended to replace any professional advice from licensed accountants, attorneys, or certified financial and tax professionals. The information is completed to the best of our knowledge and we at Kryptos do not claim either correctness or accuracy of the same. Before taking any tax position / stance, you should always consider seeking independent legal, financial, taxation or other advice from the professionals. Kryptos is not liable for any loss caused from the use of, or by placing reliance on, the information on this website. Kryptos disclaims any responsibility for the accuracy or adequacy of any positions taken by you in your tax returns. Thank you for being part of our community, and we're excited to continue guiding you on your crypto journey!
As Web3 evolves, managing a diverse portfolio has become complex. Kryptos simplifies this with advanced tools for real-time tracking, NFT management, and DeFi analytics. Discover how Kryptos turns challenges into strategic advantages for modern investors.
Struggling with crypto tax in Australia? Kryptos.io simplifies the process, ensuring accurate and compliant filings with the ATO. Track transactions and value assets effortlessly—make tax season stress-free.
Mastering Crypto Taxation: Navigate the Complex World of Digital Assets with Kryptos, the Ultimate Solution for Accurate, Efficient, and Future-Proof Tax Reporting.
