A Guide To Bitcoins And Income Taxes

Guide inspired by Canada's Bitcoin community at coinforum.ca.

When determining the personal income tax consequences of Bitcoins and similar digital currencies, there are two important questions:

1. HOW DID YOU ACQUIRE THE BITCOINS OR SIMILAR DIGITAL CURRENCIES?

Mining Bitcoins or Similar Digital Currencies

The tax consequences from mining Bitcoins or similar digital currencies depends on whether the Canada Revenue Agency ("CRA") considers the mining operations to constitute carrying on a business or whether the mining is a personal endeavour or hobby. The CRA will consider all the facts and circumstances of each situation so there is no definitive test or criteria because each individual's situation is unique.