We regret to inform you that tax season is upon us and the ATO has their eyes on your crypto profits.
A month ago I sat down to do my tax for the 2017/18 financial year. I don’t think there’s any hyperbole in saying I now truly understand what hell is. Because I was trading a lot back then. I traded in the morning, I traded in the evening, I traded while way too drunk to be trading. I bounced coins from one exchange to another, accruing a stream of forks, airdrops and ICOs along the way. Why wouldn’t I? I’d talked to my accountant: the only time I needed to pay tax was when I converted crypto into Australian dollars.
The ATO says no
Look, I can’t be too harsh to my accountant. The ATO was a few years late to the crypto party. But when their crypto guidance arrived in March last year, they killed that party as sure as someone taking a dump on the dancefloor.
Suddenly, it wasn’t just fiat-crypto transactions that needed to be accounted for. It was every single transaction between every cryptocurrency on every single exchange, based on the Australian dollar value of the cryptocurrency at the second that transaction occurred. I looked back at five years of entirely undocumented crypto shenanigans and wondered how best to fake my own death.
The horror, the horror
It took around 50 hours of ruthless slog to untangle the mess, but having survived my crypto tax odyssey here’s a few things I’ve learned:
- Invest in some crypto accounting software. I used Cointracker, but there are plenty of options out there. The packages can be a bit pricey, but they will save both your time and your sanity.
- Keep up-to-date spreadsheets of all your transactions. You can download your CoinJar and CoinJar Exchange transaction history under the Settings tab in your CoinJar or in the Account tab in your CoinJar Exchange account.
- Find a good accountant. They’ll help ensure you don’t do anything that screams, “AUDIT ME NOW”. Check out our AMA with Neil Billyard, Head of Tax at BDO Sydney, for an example of how helpful the right accountant can be.
But above all: learn the rules. The ATO reiterated only last month that they are specifically focussing on crypto right now and take it from us – they know more about your money than you think they do.
We’ve compiled some quick tips to set you on the right path, as well as a more comprehensive guide if you want a deeper dive into the who, what and where of crypto taxation in 2019. While it’s not quite the thrilling stuff that drew you to crypto in the first place, it’s the only way to ensure you can face the next bull market with a clear mind and an even clearer balance sheet.
One more thing
You know the good times are back when the crypto scams start rolling in. So, when it was announced that Bitconnect 2.0 would be launching in July – a new version of the original $US2.5 billion Ponzi scheme – it was worrying and thrilling in equal measure. Apparently, this was just some guy spamming his Binance referral link, but when these nuggets are reaching the headlines we can be sure that things are really heating up.
- From 0% to 55%: a brief guide to cryptocurrency taxation around the world – Hackernoon
- Why the IRS should treat crypto as a new asset class – Zac McClure
- How NOT to do your crypto tax in Australia – Jack Baldwin
Luke from CoinJar