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Virtual Currency Transaction


mikecay
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When reporting crypto currency gains of losses for an asset that was bough in multiple transactions and sold in multiple transaction do you report the average purchase price and sale price or do I claim it as first-in/first-out (FIFO) and show it as multiple transactions?

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Hi mikecay.

That choice is yours. But once started you have to be consistent. In most cases you track your investment and determine the ACB as you make each purchase. That gives you an average, But really the choice is yours and you can use FIFO if you want. To support FIFO you would usually be considered as a business and doing day trading and therefore any gains and losses would be income. Using the average process you could be considered to be achieving capital gains or losses.  

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  • 4 weeks later...

Hi @arif.mcmaster, To report a gain or loss on your cryptocurrency transactions, please follow the procedure below:

1. In the "Left-side menu on the Interview tab", select "Interview setup".

2. On the right-hand side of the screen, go to the "Investment income and expenses" group, check for "Capital gains (or losses) and capital gain history" and click on "Next" at the bottom of the page.

3. Return to the "Left-side menu on the Interview tab", select the topic "Capital gains (or losses) & ABIL".

4. On the screen to your right, click on the plus sign "+" icon to the right of the line "Vrtual currency transactions".

5. Enter the information about the trans action. It is mandatory to indicate the "Date of disposition" as well as the "Proceeds of disposition", you should specify the ''Adjusted cost base of shares or property'', namely the cost of acquisition of the cryptocurrency the same way you should enter the cost of the ''Expenses incurred in making the disposition''.

6. In addition, if you have requested a ''Reserve on disposition'' you must specify it.

The net capital gain or loss will be reported by the program on Schedule 3 of the federal returns on line 13200 and, if applicable, on Schedule G of the Quebec returns, in the new "Virtual currency operations" section of Part A.

The capital gain will be reported on line 12700 of the federal return and, for Quebec residents, to line 139 of the Quebec return.

If you have incurred a loss, this will be mentioned in both the federal and Quebec notices of assessment.

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@arif.mcmaster yes it is. It is mandatory to indicate the "Date of disposition" as well as the "Proceeds of disposition",  ''Adjusted cost base of shares or property'', and the cost of acquisition of the cryptocurrency . If you have no ''Expenses incurred in making the disposition'' to report, then you're done for the section.

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  • 8 months later...

I'll be claiming crypto gains/losses as a business expense on a T2125 based on CRA definition.   I have a small business that I already do this for.    Would it be best practice to detail the income/expenses related to crypto trading as a separate business or just all under my small business?  

I.e.; in Ufile, would I do a separate T2125 section for the crypto business?  

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Hi Nick123,

I assume that the crypto business is different than your other business. It would therefore be best to complete a separate business statement. You would use a NAICS code of 522390 instead. This allows CRA to distinguish the difference in the business types and could help prevent an increased review of your file. Just a suggestion.

 

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