This resource covers the basics of cryptocurrency tax in Australia and platforms dedicated to assisting with capital gains calculations. This is not a comprehensive resource. Getting advice from a qualified accountant is strongly recommended.
Cryptocurrency Tax in Australia
For the most part, basic tax principles apply the same way to both cryptocurrency holdings and other asset holdings, such as shares. In other words, you’re still required to realise a capital gains tax (‘CGT’) event when you sell or otherwise dispose of a cryptocurrency.
It’s highly recommended you speak with an accountant if you are trading or investing a significant amount of cryptocurrency. Not only do you need to record gains and losses on typical cryptocurrency sales, you may also need to account for things such as airdrops and staking rewards.
Read: Tax treatment of cryptocurrencies (ATO)
Cryptocurrencies as taxable assets
As far as the ATO’s tax treatment of cryptocurrencies is concerned, the term cryptocurrency not only describes bitcoin but also other cryptocurrencies that share similar characteristics with BTC.
Whilst you may argue that a cryptocurrency you hold is fundamentally different to BTC, the ATO will still likely deem that you are holding a taxable asset. If you sold your cryptocurrency for a profit, this would mean it’s a taxable asset. This is the same tax treatment that applies when you sell shares.
Hobby vs business
Tax reporting obligations differ depending on a number of factors, such as whether you’re investing as a hobby or as an operating business. If you are investing as a hobby, any losses you make cannot offset your other income, such as salary. Instead, if you make a capital loss for the year, you’re able to carry it forward and use it to offset any future capital gains.
Also, whether you choose to invest, trade or both, each portfolio must be recorded separately. For example, you may choose to have a long-term investment portfolio and also a trading portfolio of cryptocurrencies. You must clearly demonstrate that both portfolios have different intentions to justify different tax treatment.
Keeping a journal
To make things easier come tax time, the ATO and tax professionals strongly recommend you keep detailed records for all of your cryptocurrency transactions.
Journaling your transactions, activity and intention behind each action is widely considered best practice when it comes to record-keeping practice for tax purposes. (It can also double as a way to continually assess your investment plan.)
Cryptocurrency investors and traders will often sell one cryptocurrency for another. For example, you might sell 1 BTC in exchange for 45 ETH. (Notice that this transaction involves no $AUD.)
This sort of transaction requires you to retrieve and record the $AUD equivalent for the values of the cryptocurrencies involved in the swap.
Also, according to the Australian Taxation Office webpage entitled ‘Transacting with cryptocurrency‘ (as at Apr. 5, 2021):
“Some projects ‘airdrop’ new tokens to existing token holders as a way of increasing the supply of tokens (for example, Pundi X and Tron). The money value of an established token received through an airdrop is ordinary income of the recipient at the time it is derived.”
TokenTax is a crypto tax software platform and full-service cryptocurrency tax accounting firm. They support all exchanges—both centralised and decentralised—for tracking trades and calculating taxes. They offer a choice between a data import tool via API or an option to upload CSV data of all your trades.
TokenTax supports every country and fiat currency, including Australia. They have a suite for CPAs and filing professionals to help reconcile transactions and generate tax forms for multiple clients simultaneously.
Koinly allows users to calculate capital gains from cryptocurrency trading as well as generate income reports to show income sourced from mining, staking, airdrops, forks and more.
They also provide professional advice from a list of Australian certified tax accountants that specialise in cryptocurrencies.
Centralised and decentralised exchanges are supported for tracking trades and calculating taxes. Many countries and fiat currencies are supported, including Australia.
CoinTracker is a unified interface for cryptocurrency portfolios. It allows crypto holders to connect their wallets and exchanges and track the performance and taxes of their portfolio, wallets, and transactions in one place. It also generates cryptocurrency tax returns.
It supports a large number of exchanges, cryptocurrencies, countries and fiat currencies. You don’t need to pay for a tax plan until after you have already added your wallets and exchanges. (We recommend reading CoinTracker’s comprehensive guide to Cryptocurrency Taxes in Australia (2020–21).)
BearTax is a crypto accounting and tax tool vetted by a Chartered Accountant. It helps users fetch trades from everywhere, identify transfers across exchanges and auto-generate tax documents. This means non-taxable transactions can be identified across exchanges.
Users can import from 40+ exchanges via API and CSV and have no paywall with 24/7 local support. However, BearTax does not support FTX exchanges.