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Tax Court Delivers First Judicial Guidance on Treatment of Losses Incurred in Bitcoin Theft/Fraud

Stephanie D’Amico, Angelo Gentile, Rebecca Skinner and Luke Chao
On December 9, 2025, the Tax Court of Canada released its decision in Amicarelli v. The King, 2025 TCC 185. This landmark ruling delivers the Court’s first judicial definition of Bitcoin and demonstrates how longstanding tax principles apply to a novel asset that has been a persistent source of uncertainty among revenue authorities and taxpayers alike.

The case concerned an individual who, in 2017, committed significant personal financial resources to Bitcoin speculation through QuadrigaCX, then regarded as a reputable Canadian cryptocurrency exchange. The Appellant used RRSP savings, secured a second mortgage and obtained cash advances on credit cards to acquire a sizeable Bitcoin holding. In late December 2017, the Appellant's QuadrigaCX account was emptied without consent or explanation, and subsequent recovery efforts proved unsuccessful. Despite the absence of a traditional paper trail, due in part to the collapse of QuadrigaCX, the Court accepted the Appellant’s credible oral testimony and supporting documentation as sufficient to establish both the fact and amount of the loss.

After accepting the Appellant’s evidence of the loss, the Court then proceeded to consider its characterization for tax purposes. The Appellant’s activities, which included frequent transactions, daily market monitoring, use of borrowed funds and a clear profit motive reminiscent of historical speculative frenzies, had sufficient hallmarks of commerciality to constitute an “adventure or concern in the nature of trade.” As a result, the Court held that the loss was incurred in connection with a  “business” as defined in the Act and was therefore deductible on income account.

Aird & Berlis represented the Appellant with a team led by Stephanie D’Amico and Angelo Gentile and including Rebecca Skinner (Tax Controversy/Tax Litigation) and Luke Chao (Articling Student).

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