- Is DeFi Yield Taxable in Canada in 2025?
- How the CRA Taxes DeFi Yield in 2025
- Taxable DeFi Events You Must Report
- How to Report DeFi Taxes in Canada (2025)
- 2025 DeFi Tax FAQ
- 1. Is DeFi yield taxable if I don’t cash out?
- 2. What if I use foreign DeFi platforms?
- 3. Can I deduct DeFi transaction fees?
- 4. What are penalties for not reporting?
- Key Changes for 2025
Is DeFi Yield Taxable in Canada in 2025?
Yes, the Canada Revenue Agency (CRA) continues to treat decentralized finance (DeFi) yield as taxable income in 2025. This includes earnings from staking, liquidity mining, lending protocols, and other DeFi activities. Canada’s crypto tax framework remains consistent with prior years, requiring taxpayers to report all crypto-related income.
How the CRA Taxes DeFi Yield in 2025
The CRA classifies cryptocurrency as property, meaning:
- DeFi yield is taxable as income when received (e.g., staking rewards, liquidity pool tokens)
- Capital gains/losses apply when selling or exchanging crypto assets
- Interest from crypto lending is taxed as ordinary income
Taxable DeFi Events You Must Report
- Receiving staking rewards or liquidity pool tokens
- Earning interest from lending protocols (e.g., Compound, Aave)
- Claiming airdrops or hard forks
- Converting yield tokens to fiat or other cryptocurrencies
How to Report DeFi Taxes in Canada (2025)
- Track all transactions using crypto tax software
- Convert earnings to CAD using Bank of Canada rates
- Report income on Form T2125 (Business/Professional Income)
- Declare capital gains/losses on Schedule 3
2025 DeFi Tax FAQ
1. Is DeFi yield taxable if I don’t cash out?
Yes – the CRA taxes crypto income at the time of receipt, regardless of conversion to fiat.
2. What if I use foreign DeFi platforms?
All global crypto earnings must be reported to the CRA. Use Form T1135 if holdings exceed $100,000 CAD.
3. Can I deduct DeFi transaction fees?
Yes – gas fees and other expenses directly tied to earning yield may be deductible against income.
4. What are penalties for not reporting?
Failure to report may result in:
- 50% tax on unpaid amounts
- 5% late-filing penalty + 1% monthly interest
- Criminal charges in severe cases
Key Changes for 2025
- Stricter reporting requirements for crypto exchanges
- New Form RC265 for digital asset transactions
- Increased audits targeting DeFi users
Disclaimer: This article provides general information only. Consult a certified crypto tax professional for personalized advice.
