For crypto-curious customers, tax implications are an overlooked priority
As someone with few cryptocurrency investments in his portfolio, Plumb is quite comfortable talking about them. For interested clients, he recommends starting a course to become educated on cryptocurrency, just as it does for any asset class they are considering.
While much of the conversation talks about cryptocurrencies from an investment risk and performance perspective, not much has been done about the tax implications. Maybe it’s because it’s not an exciting topic – or maybe it’s just that there isn’t that much to explain.
“The CRA is pretty clear about how cryptocurrencies are taxed,” Plumb said. “From a taxation perspective, it’s very similar to when one buys publicly traded securities.”
If a person invests in cryptocurrencies only as part of their own wealth portfolio and not as a business, then any increase in value is realized by selling them a cryptocurrency, the amount of which is paid as capital gain. will be taxed. But if they are operating a cryptocurrency investment account as a business or a way to earn income as a job, the profits from those activities will be taxed as business income.
Plumb says that many novices to cryptocurrency investing overlook how some of the rewards even count. Many crypto trading platforms offer rewards such as coins or tokens to users as an incentive to provide liquidity to the crypto system. This practice may be likened to how banks pay interest to people who open checking or savings accounts and deposit money with them.
