How do transaction and transfer fees affect the ACB of cryptocurrency assets?
Currently cryptocurrencies are taxed as capital assets in Canada, which uses the ACB when calculating capital gains and losses.
I understand how to calculate ACB adjustments when buying and selling crypocurrencies, but there are two cases for which I am unclear: comission fees when they are paid in a third asset type, and transfer fees for moving crypto around the network. Could someone confirm the example below is correct?
Case 1: I assume that using a third asset to pay transaction fees results in a realization of capital gain or loss on that asset, while adding to the ACB of the purchased asset. Example:
If I use the Binance exchange, they have a native asset (BNB) which is used to pay trading fees. Let's say I buy 10 BNB @ each (let's pretend there's no commission), and let's say BNB immediately increases in value to each. Then I buy 1 BTC @ 10,000 at pay 0.1% commission (in BNB)
Before the BTC buy, my ACB for BNB is 0. When I buy the BTC, I need to pay worth of BNB in commissions, so this counts as a sale of BNB. Since it is now worth , I pay 0.91 BNB for the trade. My ACB for BNB is still , but I now have a capital gain of 0.91 BNB x (-) = [CO].91 CAD on the sale.
My ACB for BTC is now ,000 + = ,010 since I paid that much for the BTC. At the end of this transaction, I have
9.09 BNB @ .90 ACB
1 BTC @ ,010 ACB
[CO].91 realized capital gains on BNB
Is this correct?
Case 2: I assume that transfer fees are treated the same away as commissions, and add to the ACB for the relevant asset without realizing a capital gain or loss.
I want to move my 1 BTC to a cold storage wallet, but it has gone up to ,000 since I bought it. To do so, I will have to pay 0.002 BTC = in fees to the exchange or the network. This isn't a sale, so how does it get incorporated into the ACB for BTC and the capital gains?
My assumption is that this simply adds to the ACB for BTC, but does not count as a realized capital gain. If I am correct, then after the transfer I would have 0.998 BTC, and a new ACB of ,010 + = ,032.
Can someone confirm or correct?
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Case 1 I think you have correct. (I don’t see any errors.)
In case 2, I think you have exchanged .002 BTC for goods or services, so I think it counts as a disposition, just like the .91 BNB did in case 1, so you have a capital gain of - 20.02 = .98. The basis of the remaining .998 BTC is ,010 * .998 + .
If you don’t count the .002 BTC in case 2 as a disposition, then you cannot add its value to your basis. In that case, you would end up with .998 BTC with a basis of ,010.
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