Definition
Goods and Services Tax / Harmonized Sales Tax (GST/HST) treatment is one of the more surprising corners of Canadian crypto-mining taxation. Specific rules under the Excise Tax Act change how — and whether — mining interacts with the GST/HST system. This is general information, not tax advice; GST/HST registration and recovery questions are fact-specific and should be reviewed by a Canadian tax professional.
Mining deemed not a supply
Measures deemed to come into force on February 5, 2022 provide that where a person performs a "mining activity" — broadly, validating transactions and adding them to a distributed ledger, or contributing computing resources to do so — the provision of that activity is generally deemed not to be a supply. Because there is no taxable supply, the miner generally does not charge GST/HST on block rewards or pool payouts.
The input tax credit trade-off
The flip side is that acquisitions made to carry on mining are deemed to occur otherwise than in commercial activity, so a miner generally cannot claim input tax credits (ITCs) to recover the GST/HST paid on hardware, electricity, or hosting. There are exceptions — for example, providing mining services to an identifiable recipient outside a mining group can change the analysis.
This is distinct from income-tax treatment: a mining operation can still owe income tax as a business even where the GST/HST rules deem its mining not a supply. Separate professional advice is recommended.
In Simple Terms
Goods and Services Tax / Harmonized Sales Tax (GST/HST) treatment is one of the more surprising corners of Canadian crypto-mining taxation. Specific rules under the…