My friend and I live in Canada, Quebec. In 2018, she gave me $3000 to buy the same coins/tokens I am invested in. I bought these coins/tokens from Kucoin exchange. She is not tech saavy like I am, so I gladly did it because she would be very vulnerable to scams. I did it without charging her anything, and have no intention of making any profit from her - I did it strictly as a favor for a friend. I've held on to her coins in my wallet (cold storage) along with my own. Today her coins are worth over 100k and I'd like to cash them out and give her earnings to her. My plan is to cash out into my Candian bank account, pay the taxes on the earnings, and then wire the rest to her Canadian bank account. I would be declaring all the coins/tokens as my own, and declare the amount that I wire to her as a "gift" for simplicity. This sounds harmless and all in good faith to me, but I've recently heard stories about people getting into trouble for similar scenarios and I'm getting scared.

Is what I am doing legal? Will I be in any kind of trouble with the CRA (or any kind of authority) if I declare these coins as my own, and the 100k wire transfer to my friend as a "gift" even though it really wasn't? I regret getting myself in this situation, and feel stupid for doing so, but it's too late to reverse this. Any advice would be appreciated. We don't want to get into any kind of trouble and want to do this the right way. I have a strong background in tech, but am inexperienced with accounting and legal/financial stuff.

  • A partnership is described so why not form a partnership or a two-member LLC ? The only purpose of the partnership would be to close out the fiances but it would be done correctly. Otherwise, letters of explanation could be included with the tax forms.
    – S Spring
    Nov 24, 2021 at 6:30
  • I really don't want to go through the hassle of opening a business entity just to close out the finances, but I will if I have to... Letters of explanation would be much easier as I won't be repeating this. Nov 24, 2021 at 6:56
  • Well, Bitcoin could be held, hedged with futures, and benefit from about 7% annual contango. That strategy avoids taxes on the capital-gains or allows the capital-gains to be taken in smaller annual steps.
    – S Spring
    Nov 24, 2021 at 8:21
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    @SSpring Those are US-centric comments; OP is in Canada. Nov 24, 2021 at 13:42
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    @SSpring So you're implying that the OP paying the tax personally and then pretending the transfer is a 'gift' is the correct action to take with regards to Canadian taxes? To me that seems a dangerous conclusion to take. Even if it were legal/correct, there are other Canadian impacts to changes in reported income levels, some good, some bad. This is too complex for a flippant conclusion like that. Nov 24, 2021 at 14:29

1 Answer 1


The simplest approach to this is that you are acting as an agent for your friend. In other words you simply bought, held and then sold the coins for your friend on her behalf, not for your own benefit.

If you do that, then you don't need to declare her coins, or pay tax on them. That's perfectly legal, since you received no income or benefit from the transactions overall. You sell the coins, send her the proceeds of the sale, and say nothing about them on your tax returns. (She of course does, but that's her concern.)

It is possible, if you are audited, that you may be asked to explain the transactions, but some written communications between you and your friend stating what you are doing should be enough. Especially if your friend confirms what you are doing for her. Also some records of the transactions showing that you didn't benefit from her part of the transactions, meaning that you received $N from her, bought coin for $N, sold the same number of coin for $NN and returned $NN to her.

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    This makes sense. I actually called CRA this morning and they were suggesting something similar, but the person I spoke with wants to research a little more to see what all my options are and said she will call me back within 72 hours. I will let everyone know if they give me any more suggestions as I'm pretty sure many others are in the same situation as I am. Nov 24, 2021 at 18:27
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    The CRA called me back today and confirmed, this is the correct approach, exactly as you described. Nov 30, 2021 at 8:41

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