Some people say it’s the new gold, while others argue it’s nothing more than a fad that will crash and burn.
Cryptocurrency is a topic that’s stirring up lots of interest around the world, so what's all the fuss about? For those of you brave enough to venture into the crypto currency theme park, it must be feeling less roller coaster and more giant drop at the moment.
Whilst many investors have enjoyed dabbling, or even getting more seriously involved in this investment opportunity, the calculation of the tax liabilities can be quite confusing and time consuming.
Cryptocurrencies are treated like other investments, such as shares, with investors who buy or sell being subject to capital gains or losses, which must be reported.
The Australian Tax Office has estimated approximately 600,000 taxpayers have invested in crypto currency and have recently flagged a crackdown on this investment source to catch tax evaders. Record-keeping is a particular target they have identified, to ensure any expenses claimed for using cryptocurrencies, e.g. software or brokerage costs, are accurate.
Fortunately, we are starting to see some new software become available in the marketplace to assist crypto investors in making sure they are being compliant as well as keeping things as simple as possible. Crypto Tax Calculators can save you and your accountant significant time and therefore reduce the likelihood of unexpected bills.
How do Crypto Tax Calculators work?
You simply need to import your transaction history, categorise your transactions and calculate realised profit and income. Some software even allows you to sync your digital wallet and the tax calculation is done automatically. You can then generate the appropriate reports to send to your accountant and keep detailed records handy for audit purposes.
The good news is, if you haven’t done your crypto tax for previous years, you can use the same software to catch up as part of your first-year subscription fee. It is important that you take the time to research and understand the best crypto tax calculating software for you. Many of the software providers have different annual subscription price points for differing levels of investment.
Some examples of calculators that are trending now are:
If not already doing so, you should discuss and review tax scenarios with your accountant. By investing in and using a crypto tax calculator you will avoid the need for your accountant to manually calculate your CGT – saving time and money.
Crypto is not only highly volatile and largely unregulated, it is also a huge target for thieves and scammers. Security is a very serious
topic in the digital world none more so than when investing in cryptocurrency. More cryptocurrency has been stolen than money from any bank,
and many of the perpetrators are yet to be caught. We are witnessing a new age of digital piracy, with fortunes still being made and lost.
This information is of general nature only and is not intended as a personal advice. It does not consider your particular investment objectives, financial situation and needs. Before making a financial decision, you should assess whether the advice is appropriate to you. We recommend you consult a professional financial adviser to assist you.