How crypto staking and lending are taxed in Canada

Staking and lending are two of the most common ways to earn yield on crypto, and both have tax implications the CRA hasn't fully clarified yet.

Staking

Staking involves locking up crypto to support a blockchain network's validation process, in return for rewards.

The CRA hasn't released specific staking guidance, but the consensus view is that staking rewards are taxable as income at the time of receipt. The fair market value in CAD when you receive the reward is the income amount. That same value becomes your cost basis for the tokens received, so you're not taxed again on the same amount when you eventually sell.

Example: you receive $10 worth of ETH as a staking reward. That $10 is income. Later you sell that ETH for $100. Your capital gain is $90, not $100, because the $10 cost basis offsets it.

It's worth noting that some tax professionals argue staking rewards should be treated more like mining, with gains only taxable on disposal rather than at receipt. The income-at-receipt position is the safer and more widely adopted approach, but if your staking activity is significant, it's worth discussing the distinction with a tax professional.

Lending

Lending crypto typically involves depositing tokens into a protocol in exchange for interest, paid in crypto. Summ treats interest received as income, consistent with how bank interest is treated.

Some lending protocols give you a different token in return for depositing (e.g. a liquidity token). Depending on the protocol, this may be treated as a disposal event. Speak to a tax professional if you're using complex lending or liquidity pool structures.

The key question: business income or investment income?

If your staking or lending activity is large-scale and systematic, the CRA may treat it as business income. This is a higher tax burden than investment income, so it's worth clarifying with a professional if your yield activity is significant.

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