It’s that time of year again – with EOFY upon us, we’ve teamed up with Koinly to bring you this Aussie crypto tax guide to help you prepare when it comes to tax time.

With more than a million Aussies now owning at least one type of cryptocurrency, there was more focus on digital asset activity by the ATO in the last financial year, with all signs pointing to similar scrutiny this year too. In Australia crypto is considered an asset much like property or shares – and that means that it’s subject to tax. So, if you’re holding crypto or bought and sold throughout the last financial year, we’ve compiled this guide with the help of our mates at Koinly to help you understand what you need to know about crypto tax in 2023.For a more detailed walk-through of Australian crypto tax rules, check out Koinly’s full Australian crypto tax guide.

A note before we get stuck in: information is based on ATO’s latest advice as at June 2023. Always seek independent financial and tax advice for your circumstances.

Firstly, what counts as a crypto asset?

For individuals, the Australian Taxation Office (ATO) doesn’t consider cryptocurrencies as money or currency per se, so they are treated as capital assets like property and as such, are subject to Capital Gains Tax (CGT). Other digital assets subject to CGT include tokens and NFTs. That said, crypto can be treated as ordinary income for tax purposes depending on the transaction, so it can also be subject to income tax. This generally applies to transactions where you may earn crypto as income, such as staking or mining (see more below).

How crypto tax is calculated in Australia – knowing where you fit

As you can see above, how you’re taxed depends on your specific circumstances, as well as the specific transactions you’re making – that is, whether you’re buying, holding or selling digital assets. It also depends on the context, so whether you’re making personal transactions or transactions for business purposes; perceived as a crypto investor or trader respectively. 

As an investor, you will generally have a taxable event when you sell, exchange crypto to crypto, spend or earn crypto. When you have a taxable event, you’ll need to work out if you have made a capital gain or loss. To do this, you need to know your cost basis (purchase cost + associated fees). Your cost basis – sales proceeds = capital gain/loss amount. In Australia, capital gains are not taxed at a specific rate, rather they are included in your annual income amounts and taxed at your ordinary marginal tax rate. 

In Australia, some handy tips include the 50% CGT discount when holding a particular asset for more than 12 months. It’s also worth discussing with your accountant how you can seek tax relief on any realised losses against current or future capital gains.

“It’s really important to get on top of your crypto tax obligations ahead of this tax season,” says Danny Talwar, Head of Tax at Koinly. “There are still a lot of misconceptions out there when it comes to crypto tax and the guidance has evolved to cover more established areas of crypto such as airdrops, and staking. Seeking advice from a professional tax agent will help ensure you comply with the law and stay on top of your tax responsibilities.”

In a nutshell:

• CGT events occur if digital assets have been sold, gifted, traded for another crypto asset, or converted into fiat currency. Like any capital gains, if you’ve been HODL-ing for more than 12 months you’re eligible for the 50% discount. 
  
• Income tax events may include staking crypto or receiving a token airdrop. If you’re a trader running a trading, forging, or mining business, and you’re generating income from a business setup, then your activity will also be classed as income. However it’s important to note that there are different tax rules for businesses, which operate under trading stock rules. If you think you’re running a business it’s important to seek advice from a professional.

Lost your crypto or had it stolen? Here’s what to do. 

Generally speaking if you’re able to prove you’ve lost an asset that you own then you can claim a capital loss. That said, you must be able to demonstrate evidence the asset is lost and irrecoverable. The ATO has outlined evidence of what is expected should you be making a loss claim.  For example, you’ll need to be able to show evidence of the date you acquired the private key and the date you lost it, as well as the digital wallet address and the value of those assets at the time the private key was lost. 

Another instance of lost assets is if you’ve kept your assets on an exchange or platform that goes into administration. You may be able to claim a financial loss as an asset investor, though you won’t be able to determine the amount of capital loss before the administration process is complete. Unfortunately, this applies to many investors who have used platforms that have gone bankrupt. If you are in this situation, it’s advisable to speak with a professional to help navigate the guidance.

How to keep crypto records properly

If this is your first year holding crypto assets or you’ve been a long-time investor who needs a push on staying organised, it’s important to keep clear and accurate records of your crypto holdings so you’re prepped for next FY. 

For all crypto assets, you should keep:

• Receipts for buying, trading or selling activity, including dates of transactions and who the other party is, as well as a record of the AUD$ value estimate at the time of the transaction.
• Records of all digital wallets you hold and keys 
• Receipts for any software you’re using to manage your crypto tax affairs, as well as accountant costs if you work with one

Each crypto asset you hold is considered a separate asset, so you need to ensure that records of each are stored separately too. 

While record keeping is one of the most important things when it comes to tax time, it can be hugely time-consuming. Thankfully, Koinly has built a tax solution to help automate the tax reporting process. Just plug your wallets and exchanges in Koinly and you can track your crypto portfolio or generate a tax report based on the ATO guidance. 

About Koinly 

Koinly is a secure and powerful platform that makes crypto tax reporting simple. Koinly is a crypto tax software that helps you to quickly and accurately calculate a crypto tax report based on your crypto activity..Koinly supports more than 700 exchanges and wallets, including most local Australian platforms. You can check out more tax info on their blog and stop by the booth on both days of AusCryptoCon!

Disclaimer:

The information on this website is for educational purposes only and is based on ATO’s latest advice. Information should not be taken as professional advice from ACC or Koinly – neither party acts as financial advisors or registered tax agents. Please seek independent financial advice for your unique circumstances. ACC nor Koinly assume liability for losses incurred arising from the use or reliance of information provided on this website.