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Canada's approach to calculating crypto capital gains is different from most countries. The CRA uses the Adjusted Cost Basis (ACB) method, and if you're not applying it correctly, your tax calculations are wrong.
What ACB means
With ACB, every time you buy more of a cryptocurrency, the average cost per unit is recalculated across your entire holding. When you sell, you compare the proceeds to this average cost, not the cost of the specific units you bought.
The ACB formula
The formula is straightforward:
New ACB per unit = (Previous total cost + New purchase cost) / Total units held
You apply this every time you make a new purchase of the same asset. The ACB per unit changes with each buy, and your capital gain or loss on any sale is always calculated against that running average.
A simple example
Here's how ACB works across three trades on Bitcoin:
1st January: Buy 2 BTC at $1,000 each
Total cost: $2,000. ACB per unit: $1,000. You now hold 2 BTC.
3rd January: Buy 2 more BTC at $3,000 each
New total cost: $2,000 + $6,000 = $8,000. Total units: 4 BTC. ACB per unit recalculates to $8,000 / 4 = $2,000.
6th February: Sell 1 BTC at $5,000
Proceeds: $5,000. ACB of the unit sold: $2,000. Capital gain: $3,000. Under Canada's 50% inclusion rate, $1,500 is added to your taxable income for the year.
Notice that the gain is calculated against the $2,000 average, not the $1,000 you originally paid for your first batch. That's the core mechanic of ACB.
ACB is tracked per cryptocurrency, not per wallet
A common misconception is that ACB is calculated separately for each exchange or wallet. It isn't. Your ACB pool for Bitcoin covers every BTC you hold, across every platform and wallet.
Moving BTC from Coinbase to a hardware wallet is not a taxable event and does not change your ACB. But if your Coinbase export doesn't show the transfer, and you then calculate ACB only from your Binance history, your numbers will be wrong.
This is the most common source of ACB errors for active traders. Your full transaction history, across every platform, has to feed into a single calculation.
How Summ helps
Summ reconciles your full transaction history across all connected exchanges and wallets before calculating ACB, so the numbers reflect what actually happened.
The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Summ (formerly Crypto Tax Calculator) disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.
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