Republican Senator Richard Shelby has a new billboard dedicated to him in his home state of Alabama, though it’s not the kind he might have wanted. Shelby upset the US crypto community regarding his proposed revision to an important infrastructure bill in the House of Representatives earlier this month and has been publicly pilloried as a result.
Senator Richard Shelby. Source: NY Post
Non-profit organisation Fight for the Future, which champions digital rights and ethics, is behind the billboard “crediting” Shelby for his lone vote against revising damaging crypto regulation contained within the new US$1.2 billion infrastructure bill.
The section in the potentially harmful bill required a unanimous vote to be revised, but Shelby’s objection prevented the amendment to the cryptocurrency tax provision.
In a House voting session, Shelby opposed two amendments to the bill, requesting an additional US$50 billion in defence spending before he would endorse it.
Shelby later tweeted that he supported the amendment in principle but chose to prioritise the country’s security over innovation.
I supported @SenToomey cryptocurrency amdt. I know of its importance to innovation & job creation, but I believe it pales in comparison to the security of our nation–which is why I called for a vote on my defense infrastructure amdt. It's unfortunate that Dems blocked both amdts.
As a result, the infrastructure bill passed the Senate with its original language, which captures the wider industry with its broad definition of the term “broker”. A last effort was made to amend the language, but Democrats in the House delivered another blow to the cryptocurrency community’s lobbying efforts last week by voting not to include any amendments to the legislation.
However, according to a Bloomberg report, the US Treasury is not going to target miners, stakers, software developers and hardware manufacturers.
Crypto.com has expanded its free Crypto Tax Reporting Service to Australia, making it easier for locals to file crypto tax returns.
Offering an alternative to Koinly, Crypto.com has tailored its Tax App to meet Australian tax requirements, working with professional tax advisers to ensure calculations are consistent with domestic laws for filing crypto taxes in Australia.
✅ Simplify crypto tax filing at no cost ✅ Native support for 18 wallets, exchanges, and blockchains ✅ Import transaction data with API, CSV upload, and more
Click on the Try It Now link from Crypto.com’s blog, sign up and log in. From there, you can import your crypto data using the API Sync service or choose an alternative method. After a few minutes, you will see that all your crypto taxinformation has been imported. Now just export the file and download your tax reports and you’re done. Well, almost.
It May Be Free But It’s No Magic Bullet
Crypto.com promises to “make it easier to file crypto taxes at no cost”, but like Koinly, Crypto.com isn’t a magic bullet and doesn’t solve all crypto tax problems perfectly. Common issues arise with some transactions not importing correctly – which leaves you with the headache of tackling these errors manually.
Nevertheless, Crypto.com Tax is the first crypto tax product on the market to provide an entirely free servicefor anyone who needs to prepare their crypto tax, no matter how many transactions they have. Crypto.com Tax supports multiple wallets and exchanges.
With the massive US$1.2 trillion American infrastructure bill reaching its next stage, a last-ditch effort is being made to change some potentially damaging wording contained within the bill. If the bill is passed as is, it may have some negative ramifications for the American crypto industry.
In a letter to House of Representatives Speaker Nancy Pelosi, Democrat Anna Eshoo calls once again for an amendment to the bipartisan infrastructure bill that aims to implement possibly damaging regulations to the cryptocurrency industry.
The August 12 letter urges Pelosi to amend “the problematic broker definition” in the Senate-passed bill that now faces the lower chamber.
Today I urged Speaker Pelosi to amend the cryptocurrency broker language in the Senate’s infrastructure bill.
The legislation imposes new reporting requirements on miners, validators & developers of wallets who would be unable to comply with these requirements. #DontKillCryptopic.twitter.com/TSmSL21D5z
According to a leadership aide, the final language in the infrastructure bill will be reviewed. After the first attempt to amend the language fell short by one vote, Eshoo urged Pelosi to reconsider the wording.
According to the cryptocurrency groups and digital rights groups that combined to lobby for an amendment in the Senate, they will be taking the fight to the House after failing to secure changes in the upper chamber.
Reporting Could Be Used as Financial Surveillance
The infrastructure bill contains a provision that aims to implement additional reporting requirements for the crypto industry to help raise tax revenue for the trillion-dollar infrastructure bill. The requirements could raise US$28 billion over 10 years, according to the Joint Committee on Taxation.
The bill will be looked at again at the end of the month after the House returns from recess. According to Jake Chervinsky, general counsel for Compound Labs, “the good news is the language doesn’t take effect until 2023. In fact, it doesn’t require any new reporting until after December 31 of 2023, meaning reports filed in 2024 will have to include transactions that are subject to the provision from fiscal year 2023.”
Ultimately, Chervinsky believes the bill might contain some “Fourth Amendment concerns”. With the government being allowed to use such a broad range of private actors to take part in financial reporting of American citizens and companies, there are worries about possible surveillance issues if government were to obtain this information.
Republican Senator Richard Shelby has opposed a revised bipartisan amendment that would provide clarity for the mooted US$1 trillion infrastructure bill and exclude node validators, miners, protocol developers and more from the term “broker”.
On August 10, the Alabama lawyer filed an objection to a negotiated amendment between three Republicans – Pat Toomey, Cynthia Lummis and Rob Portman – and Democrats Mark Warner and Kyrsten Sinema after he tried to include his own amendment to the bill, an unrelated proposal that sought to increase military spending by adding US$50 billion in defence funding.
Senators Called For a Unanimous Vote
The senators called for a unanimous vote to revise the crypto tax provisions to the infrastructure bill and thus protect certain key players in the crypto industry from being labelled as “brokers”. But the proposal failed after Shelby rejected the proposal.
The Senator’s only words were “I object”, after which Democratic Senator Bernie Sanders objected to the Shelby motion, which resulted in Shelby objecting to the overall compromise.
“We’ll Be Back on This”
The objection didn’t go unnoticed by the amendment’s proponents, who shared their thoughts about the consequences of leaving the language of the bill as it is. “Who knows how much innovation we’re going to stifle?” said Toomey.
Senators Toomey and Lummis Hold Press Conference on Agreement to Fix Digital Asset Reporting Requirements in the Infrastructure Bill https://t.co/oqJLIIIQw7
We’ll be back on this, because we’ll do a lot of damage. Who knows how much innovation we’re going to stifle? Who knows what kind of new apps never emerge? It’s hard to predict what kind of completely impossible mandate results in, but it’s not good, and it’s going to bring us back here trying to clean up a mess which we could have prevented.
Senator Pat Toomey
The bill has now gone from the Senate to the House, leaving transactions reporting requirements unchanged and – somehow – forcing miners, node operators and anyone who deals with digital assets transactions to report taxes to the IRS.
It’s Not Over – Ted Cruz Calls for Crypto Rule Drop
In a speech, Republican Senator Ted Cruz shared his thoughts about the current state of the crypto space in the US, summarising the consequences and harms of this new legislation for digital assets: “The regulation of cryptocurrency might be the ugliest legislation we have seen,” he said.
If we want to legislate on this, let’s actually do our jobs, be a deliberative body, hold hearings, listen to witnesses, understand the consequences, know what we’re doing. That would be the reasonable, rational thing to do. Don’t just put out a rule of massive taxes and regulations with no understanding of the consequences on jobs and real people that would be hurt.
Senator Ted Cruz
Fear That Innovation Will Be Pushed Offshore … to China
One fear shared by the crypto community and its giants like Brian Armstrong is that this legislation would not only harm crypto in the US and force exchanges to impose Orwellian surveillance mechanisms on customers, but it will also push innovation offshore – something Cruz fears as a consequence of creating a hostile environment for software and hardware developers.
My amendment is very simple. It doesn’t add anything new to this bill. It just strikes these provisions […] let’s not do this until we know what we’re talking about. Let’s be cautious. Let’s be reasonable. Let’s not be the number one economic developer for the Communist Party of China by sending cryptocurrencies overseas to our competitors because we’ve made it impossible for them to succeed here.
A few days ago, the US Senate introduced a US$1.2 trillion bipartisan bill designed to update and regulate the country’s infrastructure. Unexpectedly, within the bill, there were provisions relating to the crypto industry.
These provisions relating to crypto sought to alter the definition of “broker” to include anyone who is “responsible for and regularly providing any service effectuating transfers of digital assets”.
This means that smart contracts, software developers or node validators are considered “brokers” as well – something that makes no sense to the crypto community.
Crypto Amendment Battle Over Legal Language
The bill sparked a battle among Democratic senators trying to narrow down the language in which the bill was written, and subsequently getting White House approval.
Crypto advocates Senators Cynthia Lummis, Pat Toomey and Ron Wyden proposed an amendment that redefines intermediaries and would exclude node validators, miners, wallet providers and open-source developers from the umbrella term “broker” and prevent them from reporting transaction data to the Internal Revenue Service (IRS).
The Wyden-Lummis-Toomey amendment is simple. It clarifies in law what most of us already believe—that validators of distributed ledger data like miners & stakers, hardware wallet providers & software developers should NOT be required to report transaction data to the IRS. pic.twitter.com/cMtoHMehiU
However, the White House appears to back Senator Mark Warner’s amendment, which imposes tighter crypto rules and decides which technologies are legal and which are not in the crypto space. Warner proposed that Proof of Stake validators comply with US tax laws, excluding Proof of Work miners without explanation.
This means US regulators will decide which cryptocurrencies and technologies are valid and which are not, something many in the industry such as Coinbase CEO Brian Armstrong, Elon Musk, the Winklevoss twins, politicians including Ted Cruz, and even celebrities like Gene Simmons have criticised on Twitter.
Agreed, this is not the time to pick technology winners or losers in cryptocurrency technology. There is no crisis that compels hasty legislation.
A Poorly Crafted Bill, Says the Crypto and Fintech Community
The crypto and fintech community has classified this bill as a “poorly written proposal” that would force crypto exchanges to establish surveillance mechanisms on their platforms as they would be required to collect user data, including names and addresses.
Armstrong was one of the first to denounce the bill’s flaws, such as defining those who deal with digital assets as brokers, or establishing Orwellian reporting requirements to surveil customers’ transactions.
4/ This makes no sense. Smart contracts, for instance, are not companies, and cannot be modified to collect KYC info or issue 1099s. They are simply software running on the blockchain that anyone can use.
Right now there’s a fight brewing in the US that could decide the future of innovation and financial freedom in the country. Industry leaders have warned that if the Warner amendment is approved, it will have a profoundly negative impact on the crypto industry, including pushing innovation offshore.
12/ The Wyden-Lummis-Toomey Amendment is win-win for lawmakers and our industry. It will provide tax revenue from crypto and ensure suitability and clarity for crypto innovators who want to build in America.
Binance Australia has partnered with tax startup Koinly to guide its users on crypto tax reporting, just as the Australian government heats up the call for crypto investors and traders to lodge their 2021 crypto returns.
Binance Steps Up to Assist Users on Tax Report
As a result of the partnership, crypto users on Binance will be able to access Koinly’s ATO-compliant tax reporting solution via an integration. With over 600 exchanges and wallet support, Binance notes that the Koinly tax reporting solution will help users lodge their crypto returns accurately.
The ATO is collecting bulk records data from Australian crypto exchanges and comparing it to amounts entered on previous tax returns. Failure to declare crypto gains can attract a penalty of 75 percent of the outstanding tax liability.
Robin Singh, founder, Koinly
Over 300,000 Aussie Crypto Users Are Likely to Report Tax Returns
A significant number of crypto users are expected to report their crypto returns this year. This is not surprising as Australia has seen an upsurge in interest in digital currency.
With approximately one in six Australians investing in crypto, taxpayers and tax agents alike are on a steep learning curve. Our community has voiced their concern around tax compliance and we’re committed to supporting them with the resources they need.
Sam Teoh, COO, Binance Australia
In 2020, the Australian Taxation Office (ATO), the country’s principal revenue collection body, issued a reminder to about 350,000 Australian crypto investors on reporting their returns. About 300,000 of those will likely be prompted to lodge their returns, while 100,000 taxpayers already have received a reminder from the ATO.
As it does the sharemarket, the ATO subjects bitcoin and other cryptos to capital gains tax. This year, the tax collection agency has stepped up its efforts to tax crypto gains. Crypto NewsAustralia reported in May that the ATO will data-match transactions on exchanges to prevent “incorrect tax deductions and claims”.
Binance Masterclass has become the leading crypto training course for both crypto newbies and enthusiasts since its launch in 2020.
About this event
Binance Australia is hosting a Tax Masterclass with Robin Singh and Michelle Legge from Koinly to cover everything you need to know about crypto taxes in Australia for EOFY 2021.
The masterclass will cover a step-by-step tutorial on generating statements, calculating your crypto tax, and filing your crypto gains with myTax to avoid penalties.
How Australia taxes Cryptocurrency: An overview of how Australia taxes cryptocurrency
Capital Tax and Income Tax: What they are, application of Capital Tax and Income Tax explained in 1-2 examples
Generate Statements from Binance Australia: Get a step-by-step guide on how to generate statements from Binance Australia
Calculate your Crypto Tax: A run-through on how to calculate your crypto tax using Crypto tax calculation software like Koinly
How to file with myTax: Filing with myTax can be complicated for the first time. Our speaker will run you through how to file your gains with myTax
Tips to reduce tax bills: There are a few simple ways to keep more money in your pocket. Our speaker will share a few tips on how to reduce tax bills.
Facilitators
Guest Speaker: Robin Singh
Robin is the founder and CEO of Koinly, a cryptocurrency tax solution that helps Bitcoin investors generate their capital gains tax reports. He has a background in finance and accounting and worked as a lead engineer at a Fortune 100 company in the UK before founding Koinly.
Guest Speaker: Michelle Legge
Michelle heads up at research and content at Koinly. Before crossing into the crypto space, Michelle looked after content and community at a Sydney fin-tech startup and held a similar role on the Qantas frequent flyer program.
Host: James Prosser
James is the host for the Binance Australia Online MasterClasses. James has been investing and trading cryptocurrency since 2017 and is also a member of the Binance Australia team.
Learn and win
The masterclass has a Q&A session to cover any questions you may have about Crypto Tax in Australia. Every masterclass participant will receive a 20% discount to sign up on Koinly. All you need to do is:
* To be eligible, participants must be a registered Binance Australia user and have completed the set tasks. Binance Australia reserves the right to cancel or amend any activity or activity rules at our sole discretion.
The Australian Tax Office (ATO) has published a free crypto tax fact sheet on its website with some tips to help Aussies with their crypto tax returns.
Calculating capital gains tax (CGT) on cryptocurrency
How and what to keep records of
Personal use assets and cryptocurrency
Examples of all of the above
Some Highlights:
These highlights were taken directly from the report without edit.
You Can Claim Your Losses
“You can claim any current year net capital loss against future capital gains. Report the loss in your tax return so you have it available for future investments.”
If You HODL, It’s Considered An Investment, Not “Personal Use”
“The longer you hold cryptocurrency, the less likely we consider it a personal use asset.”
“In most situations, cryptocurrency is not a personal use asset and will be subject to capital gains. However, limited exceptions apply.”
“Cryptocurrency is not a personal use asset if it is kept or used mainly as either:
an investment
part of a profit-making scheme
in the course of carrying on a business”
“Cryptocurrency is a personal use asset if you:
acquire and use it within a short period of time
directly exchange it for items you personally use or consume”
Record Your “Disposals”
“You must report a disposal of cryptocurrency for capital gains tax purposes if you either:
exchange one cryptocurrency for another cryptocurrency
trade, sell or gift cryptocurrency
convert cryptocurrency to a fiat currency, for example, to Australian dollars (AUD).”
“Disposals” Go Against Capital Gains
“If you exchanged cryptocurrency for goods, cash or other cryptocurrencies then this is normally considered a disposal for the purposes of capital gains tax, and you may need to include a capital gain or loss in your income tax return.
“Only the capital gains you make from disposing of personal use cryptocurrency acquired for less than $10,000 are disregarded for capital gains tax purposes.”
Transferring Between Your Wallets is Not Considered a “Disposal”, But the Fee Is
“If you only transfer cryptocurrency from one wallet to another wallet while maintaining ownership of the coin, it is not considered a disposal of cryptocurrency for tax purposes.
“If your cryptocurrency holding reduces during this transfer to cover the network fee, the transaction fee is a disposal and has capital gain consequences.”
Use the AUD Value To Calculate Capital Gain or Loss
“Convert your cryptocurrency purchases and sales into AUD to calculate your capital gain or loss.”
To help you get ready for tax time in Australia, we’ve taken the main things you need to consider when declaring your cryptocurrencies.
You can check out the full guide, written by Australian crypto exchange Swyftx. They have also created a crypto tax calculator which you can use to get an estimate on your tax payable.
Crypto Tax Calculator Australia by Swyftx
Everyone has different tax situations so please clarify your personal circumstances with your accountant.
1. Investor vs Trader
First up, the Australian Tax Office (ATO) does not view crypto as money. Instead, crypto is seen as property, subjecting it to the Capital Gains Tax (CGT). This classification means that you should update your info every time you buy, sell or gift crypto. Keep in mind that HODLing for 12 months or more will bring with it a 50% CGT discount.
Going further, if you can classify yourself as a trader, your income might instead be taxed as business proceeds.
Here’s how to tell which category you fall into.
Investor: If you’re using crypto mostly as a personal investment and earning most of your profits by making long-term investments, you would be classified as an investor.
Trader: If, on the other hand, you are running a business involving cryptocurrency, you could be classified as a trader. For instance, if you buy crypto in order to turn a profit for clients from whom you receive a commission, you could be classified as a trader.
Keep in mind that the ATO has to agree with you on this – so make sure you keep accounting records, follow a business plan, and stick to your planned business model.
2. Capital Losses and Total Assessable Income
While the CGT will deduct from your crypto profits, the reverse is also true – if you’ve lost money trading on one trade while making money on another, the financial hit you’ve taken on the negative trade can help offset the CGT owed from the positive trade.
Furthermore, your income tax and CGT tax are paid together – this is called Total Assessable Income. Make sure to combine your incomes from all taxable sources in order to figure out which tax bracket you fall into.
What Information Does The ATO Collect? The ATO can collect personal information – including your ABN – from Designated Service Providers (DSPs) in order to ensure accurate income reporting.
When is CGT applied? CGT is applied whenever you dispose of your crypto, whether by giving it away, trading it or selling it. So if you bought Bitcoin five years ago but haven’t touched your stash yet, you’re good to go.
Personal Use Assets: Although CGT can be charged in some cases when crypto is used in order to buy goods and services, it may be classified as a Personal Use Asset, and therefore exempt from CGT.
Fred is buying a new laptop from his favourite online retailer. They offer discounts on purchases made in cryptocurrency, so Fred uses Australian dollars to purchase cryptocurrency, and on the same day purchase his laptop. In this instance, cryptocurrency would be constituted as a personal use asset.
3. Getting Paid In Crypto
If you work for a crypto-related business, you’re probably getting at least a part of your pay cheque in crypto. In this case, crypto would be classified as personal income tax, not as a capital gain.
Although crypto taxes can be confusing to deal with at first, Swyftx exchange does all it can to help by partnering with developers that provide accurate reporting tools – and by keeping easy-to-understand records of your activity.
A multi-pronged taskforce that includes the Australian Tax Office (ATO), Federal Police, ASIC and the Australian Criminal Intelligence Commission (ACIC) is poised to investigate cryptocurrency transactions and their role in tax avoidance, fraud and money laundering.
The six-year-old SFCT (an acronym for the portentously named Serious Financial Crime Taskforce) claims responsibility for 40 current court cases involving individuals, along with 50 more operations it says are under investigation.
Focus On Money Laundering, Pandemic Stimulus Fraud and Misuse of Early Release Super Funds
Subjects of interest to the SFCT include the misuse of pandemic stimulus measures (such as JobKeeper), attempts to launder money via cryptocurrency, and fraud associated with last year’s early release of superannuation funds.
We’ve got a data matching program that we’ve had in place for a couple of years with digital currency exchanges … We are able to look at data matching to observe people’s spending habits, if they’re purchasing, say, luxury cars or real estate.
Will Day
In December 2018, the federal government injected $182 million in funding over four years to the ATO to extend its investigative brief. Also involved in SFCT activities are the federal Attorney-General’s department, the Commonwealth Director of Public Prosecutions, Border Force, and the Australian Transaction Reports and Analysis Centre.
