Discerning your affairs and remaining compliant with the Australian Taxation Office (“ATO”) can be a difficult task when there are so many ways of going about your crypto activities. Using a cryptocurrency online broker as opposed to an exchange can be a preferred option for trading and investing activities. Whilst we encourage our clients to engage with whichever platforms they prefer the most, it is important to understand your record keeping obligations so along the way you are collecting the correct data come tax time.
The ATO imposes record keeping requirements for taxpayers who are conducting cryptocurrency activities, they include:
- The date of your transactions
- The value of the cryptocurrency coin, or token, in Australian dollars
- The purpose of the transaction
- Details of any third parties
While the brokerage platform may provide useful information to you, it is imperative that it ticks all the above-mentioned boxes. The ATO prescribes these requirements as they are necessary in calculating your capital gains/losses and or net profit/loss for investors and traders respectively. To avoid any doubt you may have, we have prepared a list of common reports that provide the useful information required, they are:
- Full history transaction reports, including buys, sells, swaps, deposits, and withdrawals
- Detailed capital gains/losses report
- Summary report detailing holdings as at the end of the financial year
- Currency denomination in Australian dollars ($AUD)
If there is any doubt that the reports that the platform generates aren’t achieving the basic record-keeping requirements, consider a trusty third-party software provider such as Koinly.io or CoinTracking.info (there are many other providers in the market so choose one that works well for you).
Being aware of additional compliance-related burdens
You may also be required to reconcile your fiat deposits into the centralized exchanges and into the crypto brokerage platform. This may be required if you are conducting your affairs in an entity (such as a family trust or company) where your accountant is preparing your financial statements. It is imperative that this reconciliation is undertaken in the event your affairs are conducted within a Self-Managed Superannuation Fund (“SMSF”).
Trustees of an SMSF must appoint an auditor who is required to carry out the annual financial and compliance audit of an SMSF’s operations and provide their Self-Managed Superannuation Fund Independent Auditor’s Report (NAT 11466). The SMSF auditor will likely be needed to trace movements in the SMSF’s bank account to the exchange, within the exchange and the brokerage platform. We have worked with clients firsthand in this regard who have failed to keep adequate records and can be a difficult task to manage and meet due dates accordingly. This highlights the important of ensuring that thorough and accurate records are being kept and your ATO record-keeping obligations are being adhered to.
If you are struggling with maintaining your records in an effective and efficient manner, the dedicated Crypto Tax Team at Fullstack would love the opportunity to assist you in this burden. Reach out to us today
Reach out to the Fullstack Crypto Tax Team to ensure:
Your affairs remain compliant
Reduce the potential of an ATO audit
Conduct your affairs in the most tax effect manner
Fullstack has a team of seasoned crypto tax specialists, accountants, and bookkeepers to help support you. We offer record-keeping solutions, cryptocurrency tax advice and more. Schedule an appointment here to discuss your matter and how we can take it further.