Its been a big year in crypto with all time highs in major tokens like Bitcoin and Solana. Trading between various tokens is still considered to be a taxable transaction, even if you are not cashing out in Canadian or US dollars.
Depending in various factors, such as frequency and number of trades, intent, and reasons to sell the token, your gain/loss may be classified as capital gain or business income.
Why this matters?
The gains and losses from trading between various tokens need to be reported and taxes need to be paid in the year of the transaction. Additionally, if you have sufficient trades, you may be considered a “day trader” and the gain would be treated as business income.
Having this income as business income may not always be a terrible thing. You maybe able to plan your affairs better by moving these assets into a corporation and take advantage of lower tax rates and write off business expense related to earning the income.
If you’re trading NFTs, making sales of greater than $30,000 can result in GST as well. This means that you would be required charge and remit GST on your sales, unless you can confirm the buyers is non-Canadian. This can add complexities given the nature of NFTs and add costs to you as a seller.