It seems as though lately almost everyone is talking about cryptocurrencies, telling you about their crypto investments, or asking you if you’re involved. However, when it comes to tax time, many people are either forgetting to declare their crypto investments or labelling them wrongly. If you are involved with cryptocurrency, the team at Smith Shearer are here to ensure that you are making smart decisions with your investments and declaring them correctly come tax time. 

Managing your crypto investments at tax time

The ATO (Australian Tax Office) is receiving more information via data matching so it’s easier than ever to recognise when people have been investing, even in small amounts. And it’s not just the initial trade that is captured for tax purposes, it is all trades between currencies. Put simply, if you buy, sell, or invest in cryptocurrency, you need to be aware of your tax responsibilities, which will vary depending on your circumstances, but everyone needs to keep records for all cryptocurrency transactions.

Why you need to declare all crypto investments

Why you need to declare all crypto investments - key points to know: 

• The ATO has issued official guidance stating that cryptocurrency is taxed as a capital gains asset which means you have to pay tax every time you trade, sell or use crypto to pay for goods/items 
   
• It doesn't matter if you only made losses, you still have to report it – however in some circumstances you might be able to write off some of that pain via a capital loss
   
• If you exchange cryptocurrency for goods, cash or other cryptocurrencies, it is normally considered a disposal for the purposes of capital gains tax (CGT) and you may need to include a capital gain or loss in your tax return.
   
• You don’t have to pay tax if you transfer crypto from one wallet to another as long as you own both wallets (you will however still have to keep track of the original cost of the transferred coins and have sufficient proof of it)

If you need help understanding how this information applies to you, contact our team of tax accountants at Smith Shearer.

How we are helping our clients with their crypto investments

With all this in mind, at Smith Shearer we are helping all of our tax clients who have invested in crypto by following these steps: 

1. We recommend that all clients who have traded in crypto, NFT’s or similar subscribe to a tax calculator software – due to the nature of crypto trading, it is time consuming to process these trades another way, so this really is the best strategy 
    
2. The good news it the subscription fee will be tax deductible and is paid annually for as long as you need it (i.e., as long as you hold crypto)
    
3. We are recommending:

• https://koinly.io/au
• https://cryptotaxcalculator.io/au

4. You can then generate reports - you just need to import your transaction history into a Crypto Tax Calculator and it will help you categorise your transactions and calculate realised profit and income 
    
5. We recommend you then invite us to be able to view the software, so we can access your capital gains report and review a comprehensive tax report for your investments
    

Contact your trusted accountants – Smith Shearer

We are experienced and up to date with Cryptocurrency tax changes. We will ask you the right questions to ensure you are compliant. 

Contact our friendly team at Smith Shearer if you have invested in crypto and need some help at tax time. No more head scratching – we’ll support you all the way.

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