All About Estates

Digital Assets and RRSP’s, TFSA’s, RESP’s, etc

Do digital assets  e.g. cryptocurrencies (such as bitcoin, ethereum) non-fungible tokens,  qualify as investments in deferred tax vehicles such as Registered Retirement Savings Plans (RRSP’s), Tax Free Savings Accounts (TFSA’s), Registered Education Savings Plans (RESP’s) and Registered Disability Savings Plan (“RDSP’s).

The simple answer is no and maybe.

This issue came to my attention recently when a client asked me to assist him with a formal request to reverse a substantial penalty imposed by the Canada Revenue Agency (“CRA”) as a result of my client’s RRSP investing in bitcoin. This forced me to revisit the rules for qualified investments and the penalties that can be imposed thereof.

Basically, qualified investments only include money and securities listed on a designated stock exchange. As a result, digital assets like cryptocurrencies and non-fungible tokens are not qualified investments, so they cannot be held in deferred tax vehicles like RRSP’s etc. This is the no.

The article referenced here from goes into some further detail. It is an excellent recap of the issue.

It notes that the investment market place has seen the emergence of cryptocurrency -based exchange traded funds (“ETFs”). Several are traded on designated stock exchanges so they are technically qualified investments. Investor are cautioned to confirm that the specific ETF they are seeking is actually traded on a designated stock exchange. This the maybe.

On the issue of penalties, the CRA can apply a penalty equal to 50% of the fair market value of the digital asset invested in the RRSP plus tax the RRSP on any income from the non-qualified investment or any capital gain (the full amount) from disposing of the digital asset. Ouch! Similar penalties apply to TFSA’s, RESP’s and RDSP’s

As discussed in previous blogs, the CRA has the discretion to cancel these penalties under certain circumstances.

Happy Reading and stay safe.


About Steven Frye
Baker Tilly WM LLP is a leading, independent audit, tax, and business advisory firm based in Vancouver and Toronto, serving clients across Canada. Drawing on well-trained teams across a variety of disciplines, we ensure the alignment of our professional’s skills and experience with client requirements, resulting in exceptional service and business outcomes.


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