A Canadian-resident taxpayer “stakes” crypto-assets that are capital property with a custodial centralized crypto-asset trading platform (the “Platform”) that is compliant with the requirements of the Canadian Securities Administrators (CSA) including that deposited crypto-assets are held in trust for each respective investor. The staking entails validating transactions in respect of a crypto-asset and adding them to a publicly distributed ledger on proof-of-stake blockchain protocols. Regarding the treatment of staking rewards earned by taxpayers (“User Rewards”), the Directorate indicated:
- It expected that User Rewards would “generally be included in a taxpayer’s income for the year when the User Rewards are credited to the taxpayer’s account on the Platform” and that “the principles of Canderel would not typically permit the income inclusion of User Rewards to be deferred until such time that the User Rewards are disposed of.”
- In distinguishing between income from property and income from a business, Canadian Marconi considered “the ‘level of activity’ of the taxpayer in earning that income.”