For sales tax purposes, selling a cryptoasset and accepting a cryptoasset as payment are two different transactions. The sale of Bitcoin or Ether, where they qualify as virtual payment instruments, is generally an exempt supply of a financial service. However, a financial service may be zero-rated where a specific provision applies, including certain international transactions. This distinction affects entitlement to input tax credits (ITCs) and input tax refunds (ITRs). By contrast, a taxable service does not become exempt simply because the customer pays in Bitcoin.
The tax treatment also depends on the rights attached to the token, the place of supply, the activities carried on and the supplier's registration status. The federal GST/HST rules and the Quebec sales tax (QST) rules must be considered separately.
This guide is primarily intended for businesses and self-employed individuals established in Quebec.
Selling Crypto Assets: Virtual Payment Instrument or Other Property?
Bitcoin, Ether and Other Virtual Payment Instruments
Subsection 123(1) of the Excise Tax Act defines a virtual payment instrument. Subject to certain exclusions, it is a digital representation of value that functions as a medium of exchange and exists at a digital address of a publicly distributed ledger.
A virtual payment instrument is included in the definition of a financial instrument. According to the Canada Revenue Agency (CRA), its sale is generally an exempt supply of a financial service for GST/HST purposes. The Act respecting the Québec sales tax provides corresponding treatment for QST purposes.
The CRA identifies Bitcoin (BTC), Ether (ETH) and Litecoin (LTC) as examples of virtual payment instruments.
This exemption applies to the supply of the crypto asset itself. It does not mean that all fees or services offered by a crypto-asset business are automatically exempt. Each supply must be characterized according to its nature.
Stablecoins and NFTs
The GST/HST and QST treatment of crypto assets depends on their legal characteristics and the rights they confer. Not all crypto assets qualify as virtual payment instruments.
Stablecoins require particular attention. The current definition of a virtual payment instrument in subsection 123(1) of the Excise Tax Act excludes, among other things, property that confers a right to be exchanged, redeemed or converted for money or specific property or services. Some stablecoins may therefore fall outside this definition because of the redemption rights they confer. However, this does not necessarily mean that their supply is taxable: they may qualify as another type of financial instrument, such as a debt security.
In July 2026, the Department of Finance Canada proposed amending this definition so that property conferring only a right to money or financial instruments would no longer be excluded from the definition of a virtual payment instrument on that basis. The amendment remains a proposal and would be deemed to apply as of May 18, 2019, subject to certain transitional provisions. If enacted, it could therefore change the GST/HST treatment of several stablecoins.
This federal proposal does not automatically change the treatment under the QST, which must be assessed separately.
Regarding non-fungible tokens (NFTs), the CRA states, in its answer to question (d) of technical interpretation 2023-0984901C6, that NFTs are generally considered intangible personal property (IPP) rather than virtual payment instruments. Where an NFT can be used in Canada and is sold in the course of a business carried on in Canada by a person who is not a small supplier, the supply is subject to GST/HST unless an exemption or zero-rating provision applies.
The CRA also recognizes that a sale of an NFT to a non-resident purchaser who is not registered for GST/HST may be zero-rated in certain circumstances. However, the seller must be able to demonstrate that the conditions for zero-rating are met. The anonymity of blockchain transactions does not, by itself, justify assuming that a sale is zero-rated.
Finally, an occasional sale of crypto assets by an individual is not automatically a taxable supply. It is necessary to determine, among other things, whether the sale is made in the course of a commercial activity and whether the obligation to collect tax applies.
Accepting Crypto Assets as Payment
A business required to collect GST/HST and QST on a taxable supply of property or a service must do so even when the invoice is paid in crypto assets. The CRA states that the business must determine the fair market value (FMV) of the crypto assets received as consideration at the time of the transaction and retain records supporting that calculation.
The payment method does not, by itself, change the place of supply, the applicable tax rate or whether the property or service sold is taxable, exempt or zero-rated. See the CRA's guidance on accepting crypto assets as payment.
Example: A $1,000 Invoice Paid in BTC
A corporation registered for GST/HST and QST supplies a taxable service to a customer in Quebec. The agreed price is CAD $1,000 before tax. No exemption or zero-rating provision applies.
| Item | Amount |
|---|---|
| Service before tax | $1,000.00 |
| GST at 5% | $50.00 |
| QST at 9.975% | $99.75 |
| Total amount due, payable in BTC | $1,149.75 |
The corporation may accept an amount of BTC with an FMV of CAD $1,149.75 at the relevant time. It must report the tax payable in Canadian dollars, whether or not it retains the BTC received.
These rates are those published by Revenu Québec for taxable supplies made in Quebec. A subsequent sale of the BTC may nevertheless result in a gain or loss for income tax purposes.
Exempt, Zero-Rated or Taxable Supplies: Why Does the Distinction Matter?
| Type of supply | Tax charged | Recovery of tax paid on related expenses |
|---|---|---|
| Exempt | None | No ITCs or ITRs for expenses used exclusively to make these supplies |
| Zero-rated | 0% | ITCs and ITRs may be available |
| Taxable at regular rates | GST/HST and QST, depending on the place of supply | ITCs and ITRs may be available |
An input tax credit (ITC) allows a registrant to recover GST/HST paid or payable on certain purchases when the applicable conditions are met. The corresponding QST mechanism is the input tax refund (ITR).
A business that makes both taxable supplies and exempt supplies of financial services must determine the portion of shared expenses eligible for ITCs and ITRs based on their eligible use. Software purchases, platform fees and professional fees do not automatically entitle the business to recover all the taxes paid.
See Revenu Québec's explanations of exempt supplies and zero-rated supplies.
NFTs, Digital Services and Customers Outside Canada
The sale of an NFT or other IPP may be taxable in Canada, but it may also be zero-rated where a relevant provision applies to a supply made to a non-resident. The nature of the property, the place of supply and the specific conditions for zero-rating must be examined.
The purchaser's anonymity does not, by itself, justify zero-rating. A supplier must be able to establish the facts supporting the treatment adopted. Contracts, identity verification records and evidence of the purchaser's location or status may be necessary. The QST place-of-supply and zero-rating rules must also be considered.
Special registration rules for the digital economy may apply to non-resident platforms and suppliers. The CRA summarizes these rules, including those for taxable supplies of intangible personal property.
Mining and Transaction Validation: Special Rules
Mining and transaction validation activities are subject to special GST/HST and QST rules. According to CRA Notice 324, these rules may cover validation using proof of work or proof of stake, as well as certain activities involving the provision of computing resources.
Under this regime, performing a mining activity that results in a reward is deemed not to be a supply for GST/HST and QST purposes. ITCs and ITRs are denied to the extent that property and services are used for these activities.
Subsection 188.2(5) of the Excise Tax Act provides exceptions for certain mining activities performed for an identifiable person, subject to additional conditions. These include requirements concerning mining group operators and certain transactions involving non-arm's-length non-residents. Arrangements with mining pool operators must also be assessed based on their terms, including how mining risks and rewards are shared. Where the exception applies, the ordinary GST/HST rules apply. CRA Notice 324 explains these distinctions. The federal regime is generally deemed to have come into force on February 5, 2022, subject to applicable transitional provisions. The corresponding Québec provisions must be considered separately.
These rules are set out in section 188.2 of the Excise Tax Act and sections 350.12.1 and following of the Act respecting the Québec sales tax. For further details, see CRA Notice 324 -- Mining Activities in respect of Cryptoassets.
When Must a Business Register for GST/HST and QST?
A business making taxable supplies must consider the registration rules. For businesses other than public service bodies, the small supplier threshold is CAD $30,000 in worldwide taxable supplies, including zero-rated supplies and supplies made by associated persons, calculated under the rules for a calendar quarter and the four consecutive calendar quarters preceding the quarter in question.
Exempt supplies are not included in this calculation. Certain other supplies, including financial services and sales of capital property, are excluded from the calculation under the applicable rules. A business that sells taxable tokens may exceed the threshold even if it receives all payments in crypto assets.
Registration is mandatory in certain circumstances regardless of the threshold, while non-resident suppliers may be subject to special regimes. See Revenu Québec's registration guidance and the CRA's guidance on small suppliers.
Exceeding the CAD 30,000 Threshold
Exceeding the threshold in a single calendar quarter
If the CAD 30,000 threshold is exceeded in a single calendar quarter, the business immediately ceases to be a small supplier. It must collect applicable GST/HST and QST on the supply that causes the threshold to be exceeded and on subsequent taxable supplies.
Exceeding the threshold over multiple calendar quarters
If the CAD 30,000 threshold is exceeded over four or fewer consecutive calendar quarters, but not in a single calendar quarter, the business retains its small supplier status until the end of the month following the quarter in which the threshold was exceeded. It must then begin collecting applicable taxes on its first taxable supply made after losing that status.
Registration deadlines
The deadlines for submitting a registration application differ between the two tax regimes:
- GST/HST: the application generally must be filed before the 30th day following the first taxable supply made in Canada otherwise than as a small supplier.
- QST: the application generally must be filed before the first taxable supply made in Québec otherwise than as a small supplier.
See the CRA's guidance and Revenu Québec's registration requirements.
Returns and Supporting Records
A registrant must file GST/HST and QST returns for the applicable reporting periods, even when there is no net tax to remit. Revenu Québec administers both systems in Quebec, except for certain selected listed financial institutions administered by the CRA. For reporting periods beginning on or after January 1, 2024, registrants must file their returns electronically, except for charities. See Reporting GST/HST and QST.
Records should be sufficient to substantiate:
- The tax characterization of each token sold and the rights attached to it;
- Invoices, places of supply and whether the supplies are taxable, exempt or zero-rated;
- The FMV in Canadian dollars of crypto-asset payments received;
- Purchasers' status and location, where relevant;
- The allocation of expenses and ITC and ITR calculations;
- Agreements relating to mining, validation or services provided to identifiable persons.
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References Consulted
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Canada. Excise Tax Act, including subsection 123(1) and section 188.2.
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Quebec. Act respecting the Québec sales tax, including sections 350.12.1 and following.
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Canada Revenue Agency. Collecting and remitting GST/HST from crypto-asset transactions.
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Canada Revenue Agency. GST/HST Memorandum 17-1 -- Definition of "Financial Instrument", July 2026.
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Canada Revenue Agency. GST/HST Notice 324 -- Mining Activities in respect of Cryptoassets, June 2025.
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Revenu Québec. Calculating the Taxes.
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Revenu Québec. Exempt Supplies.
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Revenu Québec. Zero-Rated Supplies.
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Revenu Québec. Registering for the GST and QST.
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Revenu Québec. Reporting GST/HST and QST.
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Department of Finance Canada. Explanatory Notes Relating to the Goods and Services Tax/Harmonized Sales Tax, Excise Levies and Other Taxes and Charges, July 2026 (proposed legislation).
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Canada Revenue Agency. Technical interpretation 2023-0984901C6, August 29, 2023, question (d) concerning NFTs, reproduced by Tax Interpretations.
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Revenu Québec. Details Concerning Small Suppliers.
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Canada Revenue Agency. GST/HST Memorandum 4-5-3 -- Exports: Services and Intangible Personal Property, December 2023.
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Revenu Québec. Input Tax Credits and Input Tax Refunds.
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Canada Revenue Agency. When to register for and start charging the GST/HST.
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Revenu Québec. How to Register for the GST and QST.
Disclaimer
This article is provided for informational purposes only and does not constitute tax, accounting or legal advice. The applicable treatment depends on the facts and the taxpayer's circumstances. Tax rules and filing requirements must be verified for the relevant taxation year.
Last reviewed: October 23, 2026.
