Australia’s crypto investors and traders warned to report taxes amid the upcoming financial year

australias-crypto-investors-and-traders-warned-to-report-taxes-amid-the-upcoming-financial-year
Wooden blocks with TAX letters on them and Bitcoin coins. Isolated 3D rendering

Filing crypto taxes is a significant challenge for most traders and investors. Currently, only a handful of jurisdictions have developed a comprehensive crypto tax framework, while most depend on existing capital gain tax infrastructures. Nonetheless, tax authorities are now swinging into nab crypto tax evaders to commit an illegal offense.

Regulators down south have taken a tough stance towards crypto tax evaders, with the Australia Tax Office (ATO) issuing a warning amidst the country’s upcoming fiscal year. The ATO noted that crypto stakeholders ought to fulfill their tax obligations just like any other industry. In Australia, crypto is taxed under the capital gains tax (CGT) – ATO has since clarified that Non-fungible tokens (NFTs) fall under the same tax bracket.

The tax authority also dispelled rumors that crypto assets are only subject to taxation when gains are converted back to Australian dollars. On the contrary, traders and investors are expected to report both realized and unrealized crypto gains.

ATO’s Assistant Commissioner, Tim Loh, was keen to highlight that some traders and investors are notorious for crypto tax evasion under the umbrella of ‘anonymity.’ However, he warned that the ATO closely tracks digital asset transactions,

“While it appears that cryptocurrency operates in an anonymous digital world, we closely track where it interacts with the real world through data from banks, financial institutions, and cryptocurrency online exchanges to follow the money back to the taxpayer.”

A Solution to Crypto Tax Calculation

With Australia’s tax season around the corner, the process doesn’t have to be so complicated. According to Tim, crypto stakeholders can reduce their tax reporting workload by keeping accurate records of all transactions.

“The best tip to nail your cryptocurrency gains and losses is to keep accurate records including dates of transactions, the value in Australian dollars at the time of the transactions, what the transactions were for, and who the other party was, even if it’s just their wallet address.”

In essence, this would involve creating a spreadsheet to keep track of crypto trading/investing data. The idea may be a good strategy for some, while others might find it hectic to start building crypto tax reporting spreadsheets. The good news is that crypto tax solutions do most of the heavy lifting – one such innovation is the Crypto Tax Calculator.

Crypto Tax Calculator

australias-crypto-investors-and-traders-warned-to-report-taxes-amid-the-upcoming-financial-year

The Crypto Tax Calculator is designed to solve reporting challenges experienced by most traders and investors in the space. This calculator’s software features tax calculation tools that allow users globally to reconcile their taxes.

Notably, the tax calculator supports several local and international exchanges, including Binance, Coinbase, and Bitfinex. Users can integrate data from hundreds of sources through the platform’s direct CSV and APIs. Other supported crypto data sources include blockchain networks and digital wallets.

The crypto tax calculator further enables users to categorize transactions automatically. This function is essential given the rise of many cryptocurrency niches such as Initial Coin Offerings (ICO), Decentralized Finance (DeFi), and Non-fungible tokens (NFTs). Crypto tax calculator users can sort out their tax obligations in each niche by simply integrating their transaction data, leaving the rest of the work to the software.

Besides data integration and categorization, the tax calculator can generate tax reports for all financial years as far back as 2013. These reports are accountant-friendly, which means that users can also liaise with their accountants based on the crypto tax calculator financial reports. In doing so, this service reduces the back and forth in crypto tax reporting as most accountants are not crypto-savvy.

Conclusion

Tax compliance is one of the main fundamentals of any upcoming niche, more so one that is as young as the crypto market. That said, it comes as no surprise that tax authorities have narrowed it down to crypto gains. The ATO noted that it would prompt around 100,000 crypto stakeholders to fulfill their tax obligation in the upcoming financial year reporting.

“This year, we will be writing to around 100,000 taxpayers with cryptocurrency assets explaining their tax obligations and urging them to review their previously lodged returns,” noted Mr. Loh.

Australian crypto traders and investors now have an opportunity to reduce the calculation burden through seamless solutions like the crypto tax calculator. This tax reporting software ultimately saves crypto users’ and tax authorities’ time and enhances the level of crypto tax reporting. As more jurisdictions wake up on the crypto ecosystem, authorities will likely harmonize tax reporting across the globe to capture all market activity.

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