If you hold cryptocurrency in a spousal account or have transferred crypto to a spouse's account, you need to understand how the CRA treats losses differently than gains. In Canada, cryptocurrency losses on a spousal account follow the same capital loss rules as individual accounts, but spousal attribution rules may apply to the gains or losses depending on how the account was funded. This means your spouse typically reports their own crypto losses, but if you funded the account with after-tax money from a spousal loan arrangement, the CRA may attribute the income (or losses) back to you under subsection 74.1(1) of the Income Tax Act. The key is documenting the source of funds and the exact ownership of the cryptocurrency at the time of any trades. Spousal attribution rules were designed to prevent income splitting strategies, but they work differently for losses than they do for gains. Here's what you need to know: - Attribution applies to gains, not losses. If you transfer property to a spouse or fund their account, future capital gains may be attributed back to you. Capital losses, however, are generally not attributed. - Loans must have interest.
No. Your spouse reports their own capital losses on their personal tax return using Schedule 3. You cannot claim their losses, even if you funded the account or own it jointly. Each spouse files separately based on their own transactions.
No. Spousal attribution rules apply to gains, not losses. However, the loan must charge the prescribed interest rate or attribution rules will apply to gains instead. Always document the loan in writing and charge interest annually.
The prescribed interest rate changes quarterly and is set by the CRA. In 2024 it was 6%. Check the CRA website for the current rate before making any spousal loans to ensure you charge the correct interest.
No. Capital losses can only be used to offset capital gains on the person's own tax return. Your spouse's losses stay on their return and reduce their personal tax liability, not yours.
Keep transaction history, wallet addresses, exchange records, proof of ownership, the date and amount of any transfer between spouses, and written documentation of any loan (including interest rate and payment history). Retain these records for at least six years.