We’ve been receiving a lot of questions about cryptocurrency tax obligations in Australia, so we’ve put together a simple cryptocurrency reporting guide to get you started.
The ATO has recently contacted Australian crypto traders who are yet to report their cryptocurrency activity. Cryptocurrency is without a doubt an essential part of any tax declaration, and accountants need to be asking the question – do you have crypto?
The quick 101
- If you’re an investor, you need to declare any CGT transactions you’ve made – that’s any trade, crypto-to-crypto or crypto-to-fiat.
- If you’re a professional trader, you need to declare your crypto profits as income and can write off your expenses as deductions. Cryptocurrency you own is classified under trading stock rules.
- If your business has received crypto in exchange for goods or services, then you need to declare it as ordinary income for the invoice amount in AUD.
You can check out the full classification on the ATO’s website here.
What should I do?
To assess your reporting requirements, begin by creating a list of the different exchanges, wallets, ICO investments, DeFi applications or staking rewards you’ve been involved with. Data accuracy is essential when reporting on cryptocurrency, since the cost basis of your assets must be maintained across the many different locations taxable events occur.
Exporting data from the different platforms can be done via CSV (spreadsheet) or API (automated), but be careful since exchanges support different data exports. The most relevant information is: completed trades, withdrawals, deposits, and fees. Check that your exchange supports this data collection and read their documentation to start your export.
Once you have collected your complete dataset, you need to calculate the CGT, or income, for each of your transactions. CGT is calculated based on the difference between an asset’s original purchasing price (cost basis) and the value in AUD received upon its disposal. This is often non-trivial, even with specialist software, since the datasets can be large, incomplete, with unique formatting across different platforms.
If you prefer the peace of mind of a professional service, Cryptocate has you covered. We provide complete cryptocurrency tax reporting for investors, traders and businesses. Our fixed price reporting service ensures that you’re fully compliant up to the EOFY20.
To learn more about cryptocurrency tax in Australia, or get started, please get in touch via our website.