Last reviewed 24 August 2026 · Checked against CRA guidance · By the CryptoNorth Team
Canada uses the average cost method. Every unit of a given coin you own is pooled together, and your cost base is the total you paid divided by the total units held. It is not FIFO. Most crypto tax content online is American and teaches first-in-first-out, which will give you the wrong number on a Canadian return.[1]
Crypto-assets are treated as identical properties — interchangeable units of the same thing, like shares of one class. The CRA sets out how to cost them:
“The average cost is calculated by dividing the total cost of identical properties purchased… by the total number of identical properties owned.”[1]
And on when to recalculate: “you have to calculate the average cost of each property in the group at the time of each purchase.” Buying moves your average. Selling does not — a disposition reduces how many units you hold, but the per-unit cost base stays where it was.[1]
Three transactions in one year. Watch the per-unit ACB column — it moves on the purchase and holds steady through the sale.
The November sale is measured against the $70,000 average, not against either individual purchase. Proceeds of $100,000 minus an ACB of $70,000 gives a $30,000 capital gain, of which $15,000 is taxable. You still hold 1 BTC, and its cost base is still $70,000.
$30,000 is the Canadian figure. It is what the average-cost rule produces, and it is the number that belongs on the return.
The comparison here is only to show what goes wrong if you follow American guidance. Applying first-in-first-out to those same three transactions would match the November sale against the January coin at $50,000 and report a $50,000 gain instead. That is not a second valid option — FIFO is not the method Canada uses for identical properties, so on a Canadian return it is simply the wrong answer.
Which way the error runs depends on the order of your purchases. Here FIFO overstates the gain by $20,000; buy in the opposite sequence and it understates it. Both are filing errors.
This is the part people get wrong most often. Your adjusted cost base is calculated per asset, not per exchange and not per wallet. Bitcoin bought on Newton, Bitcoin bought on NDAX, and Bitcoin sitting on a Ledger are all one pool with one average.
All your BTC, wherever it is held. Moving it between your own wallets does not split the pool or create a disposition.
BTC and ETH are different properties. Each coin gets its own average, tracked independently.
The practical consequence: an exchange's own year-end statement is almost never enough on its own. It only knows the trades that happened on that platform, so if you hold the same coin in more than one place, its numbers will not match your actual ACB.
ACB is straightforward with a handful of buys. It stops being straightforward because every transaction feeds back into it. A swap is simultaneously a disposition of one pool and an acquisition into another, so a single trade updates two running averages. Do that a few hundred times across three platforms and a spreadsheet becomes genuinely unreliable.
This is the main reason Canadians use tax software rather than doing it by hand — but check that the tool is set to the Canadian average-cost method rather than defaulting to FIFO. Our full tax guide covers the four we looked at.
Yes — and each swap updates the cost base of both coins involved.
The 50% inclusion rate, the federal brackets, and what changed from 2025.
Ranked on documented ACB and superficial loss support, with commissions disclosed.
Seven Canadian platforms rated on cost, regulation and selection.
This page is general information, not tax advice. We are not accountants. The averaging rule described here applies to crypto held as capital property; if your activity amounts to carrying on a business, different rules apply and inventory is valued differently. If you trade frequently or at scale, speak to a CPA who handles crypto.
The full guide covers the 2026 brackets, what counts as a disposition, why exchanges do not yet report your trades to the CRA, and the software that tracks all of it.
Read the full tax guide →