Many of you got bored in lock down, didn’t you? We have noted a marked increase in the number of people trading in Crypto.
Please understand that each and every transaction is a CGT event. If you buy 0.025 of a Crypto Currency, but only sell 0.005 of it, we need to apportion the original purchase price. If you paid $10 for your original purchase, we need to apportion the cost base as follows:
0.005 / 0.025 x $10 = $2.00.
If you sold it for $3, you have made a $1 Capital Gain.
As you can imagine, this takes time, even with the modern marvels of Excel. Apportioning purchases, capturing the sales, and recording the units carried forward to next year’s trading, is time consuming – and therefore costly.
What can you do to help?
- Please ensure you send us the annual statement / profit and loss from your wallet.
- If your wallet doesn’t give you an annual statement / profit and loss, and you have significant trading, please consider a program like Koinly, CoinSpot, or one of the others on the market suitable for Australian Income Tax obligations.
- Get in touch with us early (read that to be As Soon As Possible) and we can use our standard excel, make some minor adjustments for your particular wallet and give you some training, and then you can do the data processing.
- Finally, if none of this works for you, accept that you may end up with a significant increase in our fee. One example for one client was a fee of $1100 for a $15 net gain for the year.
Whilst our fee is tax deductible, it still costs you out of pocket. Crypto is a time consuming, data hungry, and, therefore, costly investment.
Your trading results are also reported to the Tax Office. They are not giving us individual trade details because of the sheer volume of data, but they have that information and are looking for it to be reported in your tax return.
Please keep all of this in mind as you sit on your lounge and “play” with your wallet.