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Understanding Crypto Gains
When you sell or exchange your cryptocurrency, it's considered a disposal. This disposal can trigger a capital gain. A capital gain occurs when the sale price exceeds your original purchase price.
Important Note:
The Australian Taxation Office (ATO) closely monitors cryptocurrency transactions. It's crucial to accurately report any capital gains on your tax return.
Calculating Your Crypto Gains
There are two primary methods to calculate your crypto gains:
Manual Calculation:
This involves tracking your purchases and sales, converting them to Australian dollars, and determining the profit or loss.
Crypto Tax Calculator:
Using specialized software like Koinly or Crypto Tax Calculator can simplify the process by importing transaction data from your cryptocurrency exchange.
Using Crypto Tax Calculators
To streamline your crypto tax reporting, consider using a dedicated tax calculator like Koinly or Crypto Tax Calculator. These tools can save you time and potentially reduce accounting fees.
How to Use a Crypto Tax Calculator or Koinly:
If you choose to use a calculator, you can find detailed instructions on how to extract your data from your exchange provider into the tax calculator such as syncing your wallets via read only API or uploading a CSV file.
Calculating your gain using Koinly:
Below are the steps to create a Koinly account and syncing your wallet data below.
This method is free and only recommended if you have not held any of your cryptocurrencies for longer than a year. In the instance that you have held your currencies for longer than a year we strongly suggest you purchase the required reports to ensure you do not pay more tax than is required, these additional reports are also available through Koinly.
Koinly – Connecting your wallet and syncing
- Sign up
- Connect your wallet(s)
- Select “Wallet” from the top ribbon
- Select “Add wallet / exchange”
- Select “Set up auto – sync” and connect your wallet
- Allow time for sync to complete
- Once the sync has been completed
- Select “Tax Reports” from the top ribbon
- Select the applicable financial year
- Send us a screenshot of the entire screen
