Crypto & Tax....what do I do!

Crypto and tax. Yes it sounds scary, yes it's something a bit different these days, but if you have dabbled in a bit of Crypto this year then you'll need to declare it in your income tax return, but what do you need to give us and how do you do it?

Cryptocurrency or “virtual currency” has become a phenomenon over the past few years and the ATO has now taken a deeper interest in tracking the profits made from these digital coins and non-fungible tokens. 

This year the ATO are taking a microscope to Crypto and will be looking closely when it comes to your tax return, so it’s in your best interest to declare your crypto on your return.

WELL, WHAT’S THE ATO GONNA DO ABOUT IT? 

One common misconception is that if you haven’t cashed out, you’re not open to any tax on the profits, and you don’t need to declare anything on your tax return. However, if you have traded Crypto for Crypto, received staking rewards, received an airdrop or any other benefit, you will have something to declare on your tax return. 

Another common misconception is why would I declare my gains if Crypto is anonymous? While there are some Crypto currencies that are truly anonymous, you probably haven’t heard of them. For 95% however, they operate with a public ledger, meaning that each wallet (think bank account) is completely open for the world to see. If you’re asking how the ATO may know you’ve got crypto currency, well, if you’ve signed up for an exchange and had to handover some ID as proof of identity, the ATO can connect the dots there and will know you’ve traded in some crypto during the year.  

If you haven’t signed up using any form of ID and feel you may be able to dodge the ATO, it might not be that easy in the future. As crypto is publicly available online, one day the ATO may make the connection to your account over time and come knocking...whether that be days, months or years later. So, it’s always best to declare it!  

FINE! I’LL TELL THE ATO ABOUT MY CRYPTO. WHAT DO I NEED TO DO? 

In order for us to work out what goes where, we need every little detail on your Crypto shenanigans.  

To do that, we ask for a CSV (comma separated values) file of all transactions in your Crypto accounts, from when the account opened, until today. Depending on how you bought your Crypto, and what you have done with it since, you may have one account to pass on, or you may have a dozen. For each account you have, head to CryptoTaxCalculator’s exchange page, then search for each of your accounts.

Click into each of your accounts and follow the instructions for Import via CSV. Collect up all those CSV’s and then send them illumin8’s way. We will tackle the rest from there. 

If you have something a bit more niche like a hardware wallet, or non-exchange based accounts like Metamask, touch base with our accounting team and we can provide instructions on what to do from there.