Should I use a Crypto Tax calculator to track my crypto tax obligations?
We recommend using a crypto tax calculator to connect your exchange accounts and wallets through API links or CSV imports. The data can be then checked and a tax report printed for your tax accountant. This minimises the work required by your tax accountant who generally charge for their time incurred.
We have found the tax calculators below are best able to meet Australian tax requirements. Please note we may receive a small fee from these providers if you sign-up.
1. Koinly.io - click here to buy
Other options include -
Do I need to pay tax on my crypto?
Yes, your crypto trades are taxable when you sell a cryptocurrency coin or swap it for another coin. You do not have a taxable event until you either sell or swap your coins. As an example, if you buy Bitcoin you do not have a taxable event until you sell it or swap it for another coin (e.g. Ethereum), even if you have a large paper gain.
The ATO does not consider crypto to be a regular fiat currency, and considers stablecoins to be similar to other cryptocurrencies e.g. Bitcoin.
In limited circumstances cryptocurrency may be a personal use asset i.e. held for personal use or consumption. Capital gains made from personal use assets acquired for less than $10,000 are disregarded for CGT purposes. However the longer you hold the crypto the less likely it will be a personal use asset.
How do I calculate the tax if I am an investor?
You must calculate the Capital Gain or Capital Loss on each individual parcel of crypto. The Capital Gain or Loss is the difference between the parcel sold and the cost base of that parcel and any transaction costs. For example if you sold $10,000 Bitcoin and you paid $6,500 for it (your cost base) and there were $100 of trade fees, your capital gain is $3,400 ($10,000 - $6,500 - $100).
You must first apply any current year capital losses and then prior year capital losses, before applying the 50% CGT discount (where you have a held the asset for longer than 12 months) to calculate your overall net capital gain for the year.
If you have gains both subject to the discount (over 12 months) and not subject to the discount (under 12 months), then apply the losses against the gains not subject to the discount first.
Your overall net capital gain is then taxed at your marginal tax rate.
If you instead have a net capital loss overall it can be carried forward and offset against capital gains in future years.
How do I calculate the cost base as an investor?
While there is currently no specific guidance for crypto assets, the ATO's position in regards to shares etc is known. Taxation Determination 33 allows you to use a reasonable method e.g. FIFO (first in first out), LIFO (last in first out) or HIFO (highest in first out), where you can't easily distinguish the parcel being sold. An average however is generally not a reasonable method unless the shares are in the same company, acquired on the same day and confer identical rights.
How do I calculate the tax if I am a trader?
If you are conducting a business of crypto trading, your crypto sales are business income and crypto purchases are business expenses. The CGT rules don't apply, and instead you will taxed on your net business income at your marginal tax rate. Any crypto assets you hold at 30 June need to be treated in accordance with the trading stock rules using the FIFO (first in first out) method.
Traders may be able to claim additional expenses that investors cannot e.g. subscriptions, software, computer and home office expenses.
If you make a net business loss you need to consider the non-commercial loss rules before offsetting that loss against other income in your tax return.
How are other crypto events taxed e.g. airdrops, staking, NFT's etc?
Income from staking, airdrops, mining and yield farming is generally taxed as ordinary income rather than as capital gains.
The sale of NFT's are however a capital gains event.
If you have more complex transactions we would recommend discussing these with your tax accountant e.g. where you wrapped or locked a token or added or removed liquidity from pools and received another token in return, are margin trading, are involved in a DAO, or have paid transfer fees in crypto on a transfer between your wallets e.g. moving Bitcoin from your Swyftx wallet to your MetaMask Wallet.
How should I prepare for a large tax bill?
A common mistake made during bull markets is to sell investments and roll 100% of the proceeds into the next investment expecting it to also grow. However a sudden correction or end to the bull market can leave this new investment 'under water'. The investor faces the prospect of a large tax bill from the initial investment but needing to sell the current investment at a loss to raise cash for the tax payment. If the investor realises a capital loss on some or all of this current investment, it can only be offset against the capital gain if in the same year i.e. if the capital loss occurs in the next year it can't be offset against the capital gain in the prior year.
When do I need to pay tax on my crypto?
If lodging your tax return yourself it is due 31 October for the previous tax year (1 July to 30 June).
If you use an accountant/tax agent you may be eligible (depending on when you become a client and any outstanding tax obligations) for an extended due date i.e. as late as 15 May.
Can I move overseas to minimise my tax obligations?
Please note if you stop being an Australian resident for tax purposes, you are taken to have a deemed disposal of your assets (other than taxable Australian property) for their market value at the date you stopped being a resident. You can however make a choice to disregard these capital gains and losses until you actually sell those assets. This means the increase or decrease in the value of your assets after you become a non-resident is taken into account when working our your capital gains and losses on those assets.
Determining whether you have ceased being (or become) an Australian resident for tax purposes can be complex, and you should seek the advice of your tax accountant.
Can I setup a Self Managed Superannuation Fund (SMSF) to invest in crypto?
Yes, an SMSF can invest in crypto via an Australian based cryptocurrency exchange if the SMSF's Trust Deed and Investment Strategy allow this. There are many factors to consider when establishing an SMSF including your current life insurances, whether you will become a non-resident in the future (which may make your SMSF a non-complying fund), and whether you have the time to actively manage the fund's investments.
There is no minimum amount of funds required to establish an SMSF, however it generally only becomes cost effective once you have a balance greater than $250,000.
We strongly recommend you seek professional advice from a financial adviser (holding an Australian Financial Services licence) and obtain a Statement of Advice (SOA) before making the decision to establish an SMSF and invest in crypto. We do not provide investment/financial advice and cannot advise you on whether you should establish an SMSF or whether you should invest in crypto.
Should I move my crypto to an entity e.g. trust or company?
If you transfer existing assets to a trust or company you will have a capital gains tax event which may result in tax payable at your marginal tax rate. If you make the transfer for no consideration (i.e. no money changes hands) the gain or loss will be based on the market value of those assets at the time of transfer. See the questions above for how the gains and losses on assets sold or disposed of are calculated.
A trust or company can be effective to protect your assets, build your wealth over the long term, and minimise your tax obligations. Structuring of your assets can be a complex area with the up-front costs and on-going compliance costs to consider, so you should seek the advice of your tax accountant. The structure may also be influenced by the crypto exchange accounts you wish to establish if they are based outside Australia.