NFT Taxes in Canada: What Creators & Sellers Need to Know in 2025
Selling NFTs can be exciting—until tax season hits. Are your NFT earnings hobby income or business income? Do you need to charge GST/HST? What happens if you don’t? Let’s break it down in plain English.
1. Is Your NFT Income a Hobby or a Business?
Hobby Income (Not Taxed)
✅ You create NFTs for fun, not profit.
✅ Earnings are incidental (not a major income source).
❌ No tax deductions for expenses (like software or office expenses).
Business Income (Taxed)
✅ You sell NFTs regularly to make money.
✅ You have a plan (marketing, branding, etc.).
✅ Expenses can be deducted (e.g., minting fees, advertising).
Key Question:
Are you treating NFTs like a side hustle or a full business? The CRA looks at profit intent and sophistication of business activities.
2. How NFT Income is Taxed
- Business income? → Taxed in the year you receive payment.
- Investing/trading NFTs? → Taxed as capital gains (50% taxable) or business income (100% taxable).
- Foreign payments? → Convert to CAD at the exchange rate when received.
3. GST/HST Rules for NFT Sales
Yes, if:
- You sell $30,000+ per year in NFTs.
- Your buyer is Canadian (if unsure, assume they are).
No, if:
- You’re a small supplier (<$30K/year).
- Your buyer is outside Canada (but you need proof!).
Rates:
- GST: 5% (Alberta, etc.)
- HST: 13% (Ontario), 15% (Maritimes)
⚠️ Big Problem:
Most NFT marketplaces don’t verify buyer location, so you may have to charge GST/HST on every sale to stay safe.
4. Late Filing Penalties (Don’t Ignore This!)
If you owe GST/HST and don’t pay:
- 1% penalty + 0.25% monthly interest (up to 12 months).
- Negligence? → 50% penalty on what you owe! 😱
Example: Owe 10,000 in unpaid GST/HST? Penalty could be 5,000 extra.
5. The NFT Tax Trap for Canadians
The Problem:
- You can’t always prove a buyer is outside Canada.
- If you don’t charge GST/HST, you risk huge penalties.
Solutions:
- Only sell to Canadians (charge GST/HST).
- Build GST/HST into all prices (even for int’l buyers).
Our Take?
Option 2 is safer – treat it as a cost of doing business and avoid tax trouble later.
6. What About NFT Royalties?
- Same rules apply – if your total sales + royalties exceed $30K/year, charge GST/HST.
- Non-Canadian buyers? Still need proof to skip tax.
7. CARF: The Global Tax Crackdown
Starting in 2025, 48 countries (including Canada) will share crypto transaction data.
- If you sold NFTs and didn’t report taxes, CRA can find out.
- Fix past returns now before penalties hit.
8. Need Help with NFT Taxes?
We specialize in crypto tax strategies and can help with:
✅ NFT tax reporting (business vs. hobby).
✅ GST/HST compliance (avoid penalties).
✅ Amending past returns (before CRA notices).
👉 First consultation? Always free!
Final Thoughts
NFTs are fun, but taxes are real. Stay compliant, track sales, and plan ahead.
Questions? Let’s chat! 🚀