No matter if you’re a dedicated crypto trader or just someone who’s been doing a spot of dabbling with the digital asset, it is still required that you let your accountant know just how much they’ll be dealing with this tax return season.

Cryptocurrency isn’t an easy tax matter to handle either.

According to the Australian Taxation Office, “if you are involved in acquiring or disposing of cryptocurrency, you need to be aware of the tax consequences. These vary depending on the nature of your circumstances.”

Your activity related to cryptocurrency will be taxed with either capital gains tax (CGT) or income tax, depending on the type of activity you undertake.

CGT will be applicable if you:

  • Sell or gift your crypto
  • Swap your crypto for another crypto
  • Convert your crypto into fiat currency

Income tax will be applicable if you:

  • Receive staking rewards
  • Receive an airdrop.

If you conducted a crypto-to-crypto swap, you will still be taxed with CGT. This is because the ATO considers this to be a ‘disposal event’, which means that these types of transactions are taxable and must be recorded correctly as such.

To ensure that your accountant is equipped with what they need to know to handle your tax matters involving crypto compliantly, you will need to provide them with records to do with any and all transactions to do with your digital assets. These records could differ depending on the activity conducted with them.

Buying (acquiring)

You will need to keep either:

  • records of receipts of transactions
  • documents that display
    • the cryptocurrency
    • the purchase price in Australian dollars
    • the date and time of the transaction
    • what the transaction was for.

You will also need records showing:

  • commission or brokerage fees on the purchase
  • agent, accountant and legal costs
  • exchange records.

Owning (holding)

You need to keep records of:

  • software costs related to managing your tax affairs
  • digital wallet records and keys
  • documents showing the date and quantity of cryptocurrency received via staking or airdrop.

Disposing

You will need to keep either:

  • records of receipts of sale or transfer
  • documents that display
    • the cryptocurrency
    • the sale or transfer price in Australian dollars
    • the date and time of the transaction
    • what the transaction was for.

You also need records showing:

  • commission or brokerage fees on the sale or transfer
  • exchange records
  • calculation of capital gain or loss.

If you need assistance this year with your cryptocurrency and its tax obligations, you can speak to a trusted tax advisor or contact the ATO for further information.