Current cryptocurrency tax implications in Canada

I am not a tax professional. If you follow my advice you might get three square meals and a place to sleep as a visitor to the Canadian penal system.
Here are two links that you can refer to in order to consider the implications if you are a Canadian Citizen:

• What you should know about digital currency
• Barter Transactions

The fact that these pages have been archived means that in the near future there will be no change in the way that digital currencies will be treated.

How does Canada treat digital currency?

Digital currency is virtual money that can be used to buy and sell goods or services on the Internet. Bitcoins are an example of digital currency. Bitcoins are not controlled by central banks or any country, and can be traded anonymously. Bitcoins can be bought and sold in return for traditional currency, and can also be transferred from one person to another.

The description that Bitcoin can be bought and sold in return for traditional currency implies to me that it is in a class similar to gold or silver coins. If this is true I would refer you to this article Tax Consequences of Investing in Precious Metals

According to Carol DeMone, a chartered accountant and manager at Crowe BGK, earnings on gold holdings are taxed as capital gains, in the year they are sold. “There are ways to minimize the effects,” says DeMone. “However in most cases you’ll need to plan in advance.”

You have to declare capital gains when you sell property or investments for more than you paid. For example, if you bought shares for $10,000 and sold them for $15,000, you have to declare a $5,000 capital gain in the year you sold the shares. As of 2016, the capital gains inclusion rate is 50 percent, so you would include $2,500 in your total taxable income. Source: TurboTax

Imagine you have bought one Bitcoin today at $20,000 and hold it until it becomes $1,000,000 and decide to cash out $100,000 (10%) to live on ... with no other income. Ten percent of 20,000 is $2,000. You can deduct that $2000 first: $100,000 - $2,000 = $98,000. The capital gains inclusion rate is 50% so you would need to claim $98,000 * 50% = $49,000. Your tax bill would be $8,013 (if you live in Ontario).
Here is a simple calculator to play around with to determine your Capital Gains exposure.
Simpletax/Calculator - just enter the full amount $98,000 into Capital gains and it will take care of the rest. It is very enlightening to paste that this amount into each of the different income options (Employment Income, Self-employment income, Dividends etc.) You tax exposure is substantially less than most with the exception of Eligible dividends: Total Tax = $6,392.

This guidance would apply when you cash out your position for fiat dollars. What if you buy stuff with your coin?

Do tax rules apply when digital currency is used to buy goods or services?

Yes. Where digital currency is used to pay for goods or services, the rules for barter transactions apply. A barter transaction occurs when any two persons agree to exchange goods or services and carry out that exchange without using legal currency. For example, paying for movies with digital currency is a barter transaction. The value of the movies purchased using digital currency must be included in the seller’s income for tax purposes. The amount to be included would be the value of the movies in Canadian dollars. Source: RevCan

This one is very problematic because of the far reaching nature of this consider - having nothing to do with Bitcoin.
Barter Transactions

The Department takes the view that barter transactions are within the purview of the Income Tax Act.

...occasional help given to a friend or neighbour in exchange for something would not be taxable unless the taxpayer made a regular habit of providing such services for cash or barter.

How many kids mow their neighbours lawn or shovel snow. Much like an infamous case where kids were shut down from selling lemonade from a stand because they needed a licence, this smacks at the core of community. Often farmers would help each other or loan each other equipment but these would be considered a form of income if there was some form of consideration (meals etc). Aside from that, items purchased online with digital currency would be considered by the Canadian Revenue Agency as a Capital Gain (as outlined above).

The Larger Picture!!!

As I have discussed in other posts, Income Tax was initiated in Canada to pay for WWI. Its paid for already. Personal income tax is justifiable for certain things ... education and health. However they are not required as those things could be paid by "printing money". In this case, the currency would be a cryptocurrency which would be paid to those specific departments by the inhabitants of the society. Each citizen would be delivered a Canada_coin and they could sent a payment to the areas they are most concerned with: Health, Education, Infrastructure, Security. While a base amount needs to be allocated to each of these branches automatically (roads always need to be maintained) instead of having a budget arbitrarily decided by a handful of people, the entire population would decide which wallet the coin would be sent to. From there it would be possible for an individual to see exactly where the money was paid to (public ledger) whether it was paid as a salary, to purchase a good or service, or to siphoned off as an illegal allocation of money. The citizen could see if the head of a certain ministry paid for an airline ticket to go to some "conference" in Hawaii which his girlfriend/boyfriend.