Category: Cryptocurrency Tax

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Australia Cryptocurrency Tax Investing Regulation

Australia 2022 Budget Continues Capital Gains Tax on Crypto Assets

Capital gains tax will continue to apply to Aussie’s crypto investments, as confirmed by an explicit mention of digital currencies in the federal budget released on Tuesday October 25.

The budget papers 2022-23 state that legislation will be introduced to clarify that crypto won’t be treated as foreign currency for tax purposes. The incoming legislation will be backdated to income years that include 1 July 2021.

It confirms the continuation of current practices whereby investors must track, calculate and declare any capital gain or loss made on digital assets in their tax returns.

However, the budget specified the rules are different for government-issued digital currencies: “The exclusion does not apply to digital currencies issued by, or under the authority of, a government agency, which continue to be taxed as foreign currency.” 

Certainty for Investors, No Impact on Coffers

Although the mention of digital currency taxation is just one small section in a document of more than 200 pages — with no expected impact on government coffers — calling out crypto in the budget signifies the rising relevance of digital assets in financial markets. 

It reinforces a statement issued in June, not long after the Albanese Government took power, that said cryptocurrencies held as investments would be excluded from foreign currency tax arrangements — to reduce uncertainty in the wake of a decision by El Salvador to allow Bitcoin as legal tender.

In that earlier statement, Assistant Treasurer Stephen Jones said maintaining a capital gains tax approach to crypto investments, “…gives certainty and clarity at a time of volatility for crypto currencies.”

“The Government will continue to take a pragmatic and timely approach to its role in the rapidly-evolving digital currency landscape.”

Assistant Treasurer Stephen Jones

Understanding Your Crypto Tax Obligations

Most Australians who treat crypto as a personal investment, with the hope of making long-term gains, are considered investors and therefore subject to capital gains tax on the gains or losses they make on their digital assets. 

It’s important for investors to be able to assess all of their trades throughout the year so they can stay on the right side of the tax collector. Fortunately, there are some great free guides and calculators to help you manage your tax return. 

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Australia Crypto Wallets Cryptocurrency Law Cryptocurrency Tax Gaming

Northern Territory Moves to Regulate Crypto Gambling

Cryptocurrency is about to join crocs and Kakadu as one of the three defining features of Australia’s Northern Territory, with plans afoot to include crypto betting as part of the Top End’s regulated gambling industry.

The Australian Northern Territory Racing Commission (NTRC) is seeking input and feedback from gambling licensees on how the regulatory landscape might change in order to get crypto betting off the ground in the NT.

With gambling in Australia regulated by states and territories rather than at federal level, the NTRC oversees all betting interests that are licensed in the NT, including global concerns such as Betfair, Entain Group, Draft Kings and Sportsbet.

Contents of Private Document Made Public

Julian Hoskins, principal of one of Australia’s largest gambling law and regulatory consultancies, Senet, has seen a private document circulated among licensees and chose to shed light on its contents:

Any licensee, for example a sports bookmaker licensed in the Northern Territory, who wants to accept cryptocurrency for billing or paying wages needs permission to do so. And there are certain conditions attached to that.

Julian Hoskins, Senet

“It is clear from the conceptual framework that they are looking at cryptocurrency gambling and not simply exchanging [crypto] for fiat,” Hoskins added, pointing out that gamblers will most likely have to place fiat and crypto bets separately on the one platform as the two financial instruments will not be interchangeable for gambling.

Given the popularity of crypto, I imagine it would be very popular as an alternative to fiat. I think it has the potential to be quite material.

Julian Hoskins, Senet

Other States Likely to Follow Suit

Hoskins says that if this model went according to plan in the Northern Territory, gambling regulators in other states would likely follow suit, while also noting that strict identification requirements have been proposed to maintain compliance with anti-money laundering (AML) regulations. As such, gamblers will most likely have to have their crypto wallet addresses verified, with any winnings sent back to the same wallet that made the initial deposit.

According to the document, the NTRC has recommended monthly crypto deposit limits of A$2,000 for the first 12 months, with a maximum bet of A$5,000 per month.

Mindil Beach Casino, Perth, NT. Source: mindilbeachcasinoresort.com.au

Hoskins, who is a gambling industry lawyer, also explained that local gambling companies will be required by law to maintain crypto wallets that contain enough funds to fully collateralise customers’ wagering amounts, as is common in fiat-based gambling.

As for the tax implications of using volatile crypto assets to gamble, Hoskins said he was not sure “how that would be handled”, which suggests the NTRC is still considering such issues.

This all comes just days after the recently elected federal government outlined its approach to crypto regulation, with Treasurer Jim Chalmers announcing a “token mapping” exercise that is expected to help “identify how crypto assets and related services should be regulated”.

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Australia Cryptocurrency Law Cryptocurrency Tax

ATO Plans to Focus on Crypto Capital Gains for 2022 Tax Season

The Australian Taxation Office (ATO) has announced its priorities for the upcoming tax 2022 year and included is a warning for crypto investors to ensure they don’t disregard their tax obligations when it comes to the disposal of digital assets:

Crypto Capital Gains Tax The Target

Crypto capital gains are one of the four priorities for tax time listed in the May 16 media release, with the ATO flagging legal action against anyone guilty of falsifying records or who fails to substantiate their claims:

Tim Loh, the ATO’s assistant commissioner, has stated that while the ATO has a reasonable idea of investor activity, diligence on the part of taxpayers is recommended when it comes to recording transactions:

https://www.linkedin.com/in/tim-loh-632a7919/overlay/photo/

Crypto is a popular type of asset and we expect to see more capital gains or capital losses reported in tax returns this year. Remember, you can’t offset your crypto losses against your salary and wages.

Tim Loh, ATO assistant commissioner

NFTs are also within the scope of the assets that must be accounted for, as they will be subject to tax if sold for a profit.

Crypto Taxes in Other Forms

With the 2022 federal election only days away, the policy is being prepared for the regulation of digital assets and artists. NFTs reportedly needed quick policy implementation to prevent a drain on the economy. However, pro-crypto NSW Senator Andrew Bragg has said that such taxing is “inadvertent” and offers no real transfer of value.

June 2021 saw the assembly of a cooperative task force consisting of the ATO, the Australian Securities and Investments Commission (ASIC), the Federal Police, and the Australian Criminal Intelligence Commission (ACIC). Labelled the Serious Financial Crime Taskforce (SFCT), its role is to investigate the circumstances surrounding crypto money laundering, fraud, and tax avoidance.

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Bitcoin Crypto News Cryptocurrencies Cryptocurrency Law Cryptocurrency Tax

Panama Passes Crypto Bill Exempting Digital Assets From Capital Gains Tax

One by one, nation states are taking steps towards becoming attractive destinations for the burgeoning digital asset sector. The latest to do so is international financial centre Panama, which has just passed a bill exempting crypto from capital gains tax:

Investment and Employment Boost

A plenary session of the Panamanian Legislative Assembly has approved a bill (40-0) regulating the use of crypto in the Central American country:

Project Law No. 697, which regulates the commercialisation and use of cryptocurrencies, the issuance of digital value, the tokenisation of precious metals and other goods, payment systems and dictates other provisions, was approved in the third debate.

Panamanian national assembly, Twitter

Congressman Gabriel Silver, who has actively promoted the bill, announced: “Crypto Law approved in third debate! This will help Panama become a hub of innovation and technology in Latin America!”

Last week, he argued that the bill aimed to “give legal stability to crypto assets in Panama [and] develop the crypto industry in the country to attract more investments and generate more employment”. Silver has since added:

The only thing missing is for the President to sign it. Thank you to all who helped. This will help create jobs and financial inclusion.

Gabriel Silver, Panama Congressman

Panama Steps Up its Game

Increasingly, we’re seeing countries, cities and regions implementing attractive regulatory frameworks to attract crypto capital and talent.

They don’t need to go as far as El Salvador and the Central African Republic and make bitcoin legal tender. Many have instead opted for zero capital gains tax, including the Swiss city of Lugano, as well as Roatán in Honduras and Madeira in Portugal.

Bitcoin Beach: has El Salvador started a fiat crypto wave? - Raconteur
A vendor at “Bitcoin Beach”, El Salvador. Source: Raconteur.net

In fact, Bitcoin educator Stefan Livera has argued that “removing capital gains from bitcoin spending is more important than legal tender laws”, and he may well be right.

The logic is that in doing so, bitcoin or cryptocurrencies become de facto legal tender as the act of spending does not constitute a capital gains tax event. This is also attractive to Bitcoiners as citizens have the ability to opt in, unlike legal tender laws, which are imposed from above by central authorities.

Panama’s latest move provides a clear signal to competing jurisdictions that when it comes to luring crypto investment and employment, it means serious business.

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CBDCs Crypto News Cryptocurrency Tax India Regulation

India Set to Tax Crypto Income at 30% and Plans to Launch ‘Digital Rupee’ CBDC

Following the country’s annual budget speech, India’s finance minister Nirmala Sitharaman announced a 30 percent taxation rate on any income stemming from the transfer of virtual digital assets. She added that the country is likely to issue the digital rupee in the 2022-2023 financial year.

News Welcomed by Indian Crypto Investors

In a country where crypto investment has shot up by 19,000 percent in a year, and the younger cohort is opting to invest their assets in crypto rather than traditional options such as gold, the news has been welcomed.  

“There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime,” the minister said in the budget speech delivered on February 1.

Clarity regarding taxation suggests that crypto would not be banned as some had feared. Apart from the high tax rate, India will not provide any deductions on crypto income except the cost of acquisition. Further, losses incurred by transferring crypto cannot be offset against any other income, unlike losses from stocks.

According to the speech, tax deductions at source will also be imposed on payments for the transfer of crypto assets at a rate of 1 percent for transactions over a certain threshold. Any gifts of crypto assets will also be taxed in the hands of the recipient.

Although the words “crypto” and “cryptocurrency” were not used during the speech, the minister used the phrase “virtual digital asset”, which the industry takes as a term for cryptocurrencies and NFTs.

India to Launch ‘Digital Rupee’ CBDC in Fiscal Year 2023

The budget speech also gave a specific timeline for the launch of India’s central bank digital currency (CBDC). Minister Sitharaman has said that a “digital rupee using blockchain and other technologies” is set to be issued by the Reserve Bank of India starting in the fiscal year 2022-2023. According to the minister, “digital currency will lead to a more efficient and cheaper currency management system”.

Although the clarity given regarding taxation is a step in the right direction, the country still awaits regulatory clarity. The government was scheduled to introduce a crypto bill for discussion in parliament but has not done so yet. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, when presented, will provide specific details on whether India is going to embrace cryptos officially or not.

Will Taxation Deter Retail Investors?

The news from India is significant, seeing as it will affect over one billion people and is likely to set a trend. But the question remains whether imposing a 30 percent tax on virtual digital assets will deter retail investors. While some have argued that 30 percent is too much, others disagree, saying it is in line with taxation on personal income.

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Accointing Crypto News Crypto Trackers Crypto Wallets Cryptocurrencies Cryptocurrency Tax

Accointing Launches Crypto Trading Tax Optimiser Tool

Swiss crypto tracking and tax assistance platform Accointing has released a new Trading Tax Optimiser (TTO) tool to help traders stay on top of the taxes they are liable pay for their trades.

For any sort of trader, it’s important to keep track of trades in order to file for taxes. Traders who don’t make proper preparation can be confronted by huge tax bills that can potentially eat away at profits. Accointing can assist users with organising and keeping track of their crypto data:

How the TTO Tool Works

Some crypto traders don’t really pay attention to the potential tax consequences of their trades until it’s too late. It can easily be the case that if a trader had sold a different coin from a different wallet using the same strategy, they could have reduced their tax bill substantially.

To fill this gap, Accointing’s TTO tool can help determine tax consequences before making a trade to help reduce tax deductibles. Before a trade is made, users can take a look at their dashboard to see the tax implications of the particular coin they want to sell.

The difference in tax rates for selling the same coin held in different wallets can be significant. By displaying the tax implications of selling different coins in a portfolio and which coins attract the lowest taxes, users can manage their deductibles and potentially save thousands of dollars.

Getting Ready for Tax Time

According to Accointing’s business developer, in the US the highest marginal tax rate at the federal level is 37 per cent if you sell one coin, but selling the same coin from a different wallet for the same price can result in a tax rate as low as 15 per cent. The platform allows users to see these implications before making a trade, which could cost them more at tax time. Accointing also has a solution for Australian users to help them at tax time.

By planning ahead, the tool can show users how their tax situation will develop by tracking positions across all wallets. And since all the data is stored on the platform, when it comes around to tax filing time users can simply print their tax report.

In October last year, Melbourne’s RMIT University urged the Australian government to reform crypto capital gains tax. Here are some additional tax tips for Australian traders published by the Australian Tax Office (ATO).

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Accointing Cryptocurrency Tax

Accointing.com – Bitcoin Tax Calculator for Australia

ACCOINTING.com.com, a leading crypto tax and portfolio tracking platform, is the perfect solution for filing your Australian Crypto Tax Report. The Australian Tax Office (ATO) has created clear guidelines to help people file their cryptocurrency taxes each year.

ACCOINTING.com makes it easy to file your crypto taxes in full compliance with the ATO by allowing you to import over 300 of the most used exchanges and wallets to then process all of the transactions you have made during the year. With the help of ACCOINTING.com, you will be able to enter your entire year of cryptocurrency activity into the system and find out whether you have gained or lost money in total, and how much in taxes you may owe or are able to tax-loss harvest in the event of an overall loss.

Crypto tax software like ACCOINTING.com makes the process easy to handle for anyone, regardless of their crypto tax knowledge. When a capital gain or loss is made from cryptocurrency, it is calculated by taking the market value of the cryptocurrency in Australian Dollars at the time of disposal. Whether you are an investor or active trader, ACCOINTING.com has the tools to help you process a fully compliant tax return for the Australian Tax Office. Investors from Australia benefit from a long-term 50% capital gains discount on their taxes if they hold their cryptocurrency for over 12 months without making any buys or sells on what they were holding.

ACCOINTING.com’s robust crypto tax software can efficiently calculate all capital gains tax and income tax to then report to the ATO each year. Without using a software like ACCOINTING.com to do your crypto taxes, the process would be increasingly difficult with each extra exchange, wallet, trade, and other activity that is needed to be accounted for on the tax report.

Regardless whether you use cryptocurrency as an investment, receive staking rewards and airdrops, or use crypto for personal use, ACCOINTING.com is a great option to handle all of your crypto tax needs. There are a wide range of scenarios when dealing with cryptocurrency when it comes to classifying whether a transaction, deposit, withdrawal, or sale is categorised as a taxable event.

Handling a mixed basket of cryptocurrency transaction scenarios is one of ACCOINTING.com’s many specialties. Those people who actively buy, trade, earn airdrops, mine cryptocurrency, earn staking rewards and more can easily input their transaction data into the ACCOINTING.com system to find out which actions they made that were taxable or tax free.

This information is crucial when submitting an accurate tax report to the ATO in relation to crypto activity each year. In addition, users who sell, swap, use crypto as payment, for gambling, gifts, interest paid, lost funds, and more can use ACCOINTING.com to get accurate and efficient advice on what needs to be reported as taxed and what can be used to save money from harvesting potential losses.

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Crypto.com Cryptocurrency Tax Press Release

Crypto.com Expands Free Crypto Tax Reporting Service to the UK

Following the successful launches of Crypto.com Tax in Australia, Canada and the US earlier in August, Crypto.com has announced that this service is now also available in the UK, with more markets to come.

Crypto.com Tax makes it easy to file complicated crypto taxes in a matter of minutes and at no cost. This service is tailored to meet UK tax requirements and supports more than 20 of the largest wallets and exchanges, including the Crypto.com App and Exchange.

We’re excited to expand our free-to-use crypto tax reporting service to Australia. We have long been committed to offering the most compliant and easy-to-use crypto platform in the world. As part of that commitment, we are proud to offer all Australian crypto investors an easy solution to filing their taxes. More markets will be added soon.

Kris Marszalek, co-founder and CEO, Crypto.com

Crypto.com Tax enables users to quickly generate accurate and organised tax reports, including transaction history and records of capital gains and losses, as well as other crypto-related taxable and non-taxable transactions.

Crypto.com has worked with professional tax advisers to make sure that the calculation logic is consistent with available guidance and laws for filing crypto taxes in the UK.

Try it now

Helpful Facts About UK Tax Rules
2020/21 Tax Year: April 2020 – April 2021
Paper Returns Deadline: October 31, 2021
Online Tax Returns Deadline: January 31, 2022
UK Tax Logic: Share Pooling

About Crypto.com

Founded in 2016, Crypto.com today serves over 10 million customers with the world’s fastest growing crypto app, along with the Crypto.com Visa Card – the world’s largest crypto card program – the Crypto.com Exchange and Crypto.com DeFi Wallet. Recently launched, Crypto.com NFT is the premier platform for collecting and trading NFTs, carefully curated from the worlds of art, design, entertainment and sports.

Crypto.com is built on a solid foundation of security, privacy and compliance and is the first cryptocurrency company in the world to have ISO/IEC 27701:2019, CCSS Level 3, ISO27001:2013 and PCI:DSS 3.2.1, Level 1 compliance, and independently assessed at Tier 4, the highest level for both NIST Cybersecurity and Privacy Frameworks.

With over 2,600 people in offices across the Americas, Europe and Asia, Crypto.com is accelerating the world’s transition to cryptocurrency. Find out more at: https://crypto.com

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Banking Bitcoin Cryptocurrency Tax Investing

El Salvador to Exempt Foreign Investors from Tax on Bitcoin Profits

The government of El Salvador announced on September 13 that the country will exempt foreign investors from taxes on their bitcoin (BTC) profits to stimulate and hopefully increase foreign investment.

According to Javier Argueta, legal adviser to President Nayib Bukele, “there will be no taxes to pay on either the capital increase or the income” of bitcoin. After El Salvador became the world’s first country to make Bitcoin (BTC) legal tender earlier this month, policymakers made their move. For the bitcoin enthusiast, however, not paying taxes on capital gains might sound too good to be true.

In cooperation with global companies such as Bitso crypto exchange and Silvergate Bank, El Salvador has launched the official BTC wallet known as Chivo, which allows users to convert bitcoin transactions into USD or withdraw without incurring transaction fees by using a specific ATM. The wallet also aims to facilitate remittances for Salvadoreans working overseas.

Using Bitcoin Safely

Experts and regulators have highlighted concerns about the cryptocurrency’s volatility and its potential to impact inflation in a country with already high poverty and unemployment. That transactions are not reversible and lack protection for users is a potential weak point.

However, according to Argueta, transactions would be halted temporarily if bitcoin’s value were to collapse, in order to minimise the impact of extreme currency fluctuations. And even as the BTC price saw heavy fluctuation last week, El Salvador bought the dip.

The government says its experiment will give many Salvadoreans access to bank services for the first time, and hopes it will shave millions of dollars off commissions on remittances sent home from abroad, mainly from the US.

Remittances account for more than a fifth of the country’s GDP.  The introduction of bitcoin as legal tender will cut the fees of those remittances significantly and remove commissions entirely. The technology used for bitcoin is another step toward banking El Salvador’s unbanked.

What About Fraud and Money Laundering?

There are concerns about the anonymous nature of bitcoin and its role in money laundering and other financial crimes. But since Salvadoreans use a specific app, and not unregistered exchanges and the like, some of those problems are eliminated.

Argueta said that the Chivo wallet has traceability measures to alleviate popular misunderstandings and outright false narratives that bitcoin is used primarily for money laundering or anonymous criminal activity.

“We are implementing a series of recommendations from international institutions against money laundering,” Argueta specified.

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Crypto.com Cryptocurrency Tax How-to

How to Prepare Your Crypto Tax Return Data Using Crypto.com Software

In this guide we will show you how to get your crypto data imported and organised all in one place ready to send to your accountant to help with your tax return.

Firstly, go to Crypto.com Tax webpage and sign up for free.

Once you’ve signed up and logged in, you’ll need to add the crypto exchanges & wallets that you use. In this example, we’ll use Coinjar exchange.

Click Wallets & Exchanges and then Add Wallet/Exchange +.

Select CoinJar, enter a name for your exchange ie CoinJar Personal Account, then select API Sync and confirm.

You’ll be prompted to login into CoinJar to give read only access and then it will redirect you back to crypto.com website.

The data sync could take a couple of minutes to complete. Once it’s done you might see that there are transaction issues that need fixing. To fix these click the Issues tab and then purchase history transactions or uncategorised.

Click Edit to update the details of the transactions to fix any issues.

In the case of missing purchase history errors (in red), this could be that the fee isn’t being picked up. In this case, the BTC was purchased with a fee included in the amount.

In this case, you can just ignore this error. We’ll confirm with Crypto.com but it seems this error is incorrect.

Fixing transaction issues

To fix any outstanding issues with the transactions you can filter them by date or issue type.

An important one to do is the Uncategorised transactions. Use the filter to show them, and then click Edit.

Then enter the details for the transaction. In this example, it was a transfer from one exchange to another. If the other exchange is not added, then you’ll need to add it to select it. If you don’t know what the fees were then you’ll need to find the blockchain transaction; you can find the transaction id on your Coinjar history.

Generating tax reports

Once you’ve fixed up all the outstanding issues you can generate your tax reports by clicking Tax Reports.

This will export your tax reports into CSV format, which you can then send to your accountant to help prepare your tax return.

If you don’t have an accountant, then check out our guide on the Top 10 Crypto Tax Accountants in Australia.

If you need help using the Crypto.com tax software, then check out our troubleshooting section below or use the following links.

Troubleshooting

Tax software is an extremely hard thing to build as there are so many moving parts, and you may encounter errors when importing from different exchanges and wallets. We will try to update the section below to help diagnose and fix these errors.

Custom Data Import Error

When importing custom data (Crypto.com Tax CSV), we encountered this error.

“Invalid amount format in csv report: null”

If you’re using the Crypto.com Tax CSV format, then use the sample template CSV and check the supported values for each column are correct as per the instructions on the Data Import help article.

Failed API Sync Error

When connecting CoinJar we encountered this error:

“Sync failed. Please try again”

To fix this simply click the Sync button. After clicking it, wait a minute or so and if it fails, repeat the click and wait again until it works.