CRA Tracking Your Bitcoin? How to Calculate Your 'Adjusted Cost Base' (ACB) to Avoid an Audit

🛑 Stop Using "FIFO"

If you are calculating your crypto taxes using the "First-In, First-Out" (FIFO) method commonly used in the USA, you are filing incorrectly. As of 2026, under the global Crypto-Asset Reporting Framework (CARF), exchanges like Wealthsimple and Newton automatically report user data to the Canada Revenue Agency (CRA). The CRA demands that you use the Adjusted Cost Base (ACB) method. Using the wrong formula doesn't just mean incorrect taxes; it automatically flags your account for an audit.

CRA Tracking Your Bitcoin?

While Canadian exchanges provide transaction history, they often do not calculate your final capital gains liability accurately because they cannot see your activity on other platforms.

You are legally required to do the math yourself. And in Canada, that math is entirely based on the "Weighted Average Cost."

FIFO vs. ACB

Let's examine a simplified scenario to demonstrate how drastically the tax bill differs.

Scenario:

• Jan 1: Buy 1 BTC for $10,000.
• Feb 1: Buy 1 BTC for $50,000.
• Mar 1: Sell 1 BTC for $60,000.

Method	Cost Calculation	Capital Gain
US Method (FIFO)	Sells the first coin ($10k cost)	$50,000 Profit (High Tax)
Canada Method (ACB)	Average of all coins (($10k+$50k)/2 = $30k cost)	$30,000 Profit (Lower Tax)

In this scenario, using the Canadian method actually saves you taxes. However, if you file using FIFO and the numbers were reversed, the CRA will recalculate it, reassess you, and charge interest on the discrepancy.

The "Superficial Loss" Trap

Just as with equities, you cannot sell crypto at a loss and repurchase it immediately to harvest a tax loss.

If you (or your spouse/corporation) buy back the same asset within 30 days (before or after the sale), your capital loss is denied. Instead, the loss is added to the ACB of the new coins. This is the Superficial Loss Rule.

Warning: Moving crypto from one wallet to another (e.g., Coinbase to Ledger) is NOT a taxable event (it is a "Transfer"). However, using crypto to pay for goods or gas fees is a taxable disposition.

Chief Editor’s Verdict

Tracking Adjusted Cost Base manually in Excel is a nightmare if you trade frequently or stake assets.

Use tax software specifically designed for the Canadian market (like Koinly or CoinTracker) and ensure the settings are toggled to "ACB (Canada)". The subscription cost is negligible compared to the hours of headaches and potential CRA penalties.

⚖️ Legal Disclaimer:
The information provided in this article is for educational purposes only and does not constitute financial, legal, or tax advice. Cryptocurrency taxation in Canada is complex and subject to evolving CRA guidance and the Income Tax Act. Every transaction (including crypto-to-crypto trades and staking rewards) may be a taxable event. Please consult with a Chartered Professional Accountant (CPA) who specializes in cryptocurrency before filing your tax return.