Cryptocurrency – ATO tracking & how tax is calculated.
Let our Accountants Jamie & Cameron break down the minefield that is cryptocurrency!
Cryptocurrency can feel like a minefield when it comes to preparing your tax return. Tracking all your crypto trading, transfers, NFT’s, airdrops & referrals… then staking rewards, learning, watching, browsing, playing & shopping to earn & understanding how each is taxed can be headache-inducing. That’s why we’re here – to simplify the process & ensure your cryptocurrency tax reporting is squeaky clean.
Can the ATO track cryptocurrency?
You may be asking yourself – why do I need to report my cryptocurrency to my accountant? The short answer is, the ATO already know when you’re trading cryptocurrency. The ATO has developed a data matching program with cryptocurrency exchanges to ensure no cryptocurrency transaction sneaks through the cracks. Literally, none. They will notify cryptocurrency investors through warnings on their MyGov & ATO prefill reports to ensure all transactions are reported in your tax return. So it’s important you’re honest with us when we are preparing your tax return. It will only come back to bite you later.
How is cryptocurrency taxed in Australia?
The ATO rarely views Bitcoin & other cryptocurrencies as currency or money. Instead, for the purposes of tax they class cryptocurrency as property. As such, trading falls under the Capital Gains Tax (CGT) regime. This includes all cryptocurrency coins, NFTs, tokens & stablecoins.
Cryptocurrency earned through methods other than directly purchased – your staking rewards, referral rewards, airdrops etc – will generally be classified as income earned & subject to ordinary tax regime.
How tax is calculated on your cryptocurrency
The tax you pay on your cryptocurrency gains depends on your personal taxable income. Cryptocurrency needs to be reported within your personal tax return & is subject to the same marginal tax rates that your PAYG income is. Any income or profit you make on your cryptocurrency trading gets added to your taxable income which determines what additional tax you will be required to pay from your cryptocurrency trading. Keep in mind, any assets that are held for more than 12 months get a 50% CGT discount, reducing your taxable gain by 50%.
Who can assist me with my cryptocurrency reporting?
If you find the above overwhelming – fear not. There are now platforms such as Koinly that can assist in simplifying your cryptocurrency reporting for you. They can generate cryptocurrency tax reports from your cryptocurrency trading history, allowing you to provide your accountant with a simple summary of your cryptocurrency activity. If this is something you are interested in – please let us know. Highview Accounting & Financial has built a relationship with Koinly after much research, & has secured a referral code with them that will give you a 20% discount on tax reports if used when setting up your account. We do suggest you chat directly with your Highview accountant about Koinly & it’s benefits so send us an email if you’re wanting to find out more. In the meantime, you can access the referral link here.
Don’t be shy – get in touch!
In summary, there’s no need to fear cryptocurrency & it’s overwhelming minefield. Rather, speak with your Highview experts & let us take the stress out of it all!
Article written by Highview Accountants Jamie Irwin-Smith & Cameron Angus.