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Taxable Event Between Crypto Trades

This post is archived and may not be up-to-date.

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Initiate

Replies 2

Exactly. If I had to liquidate my btc holdings today in order to pay this 'crypto-to-crypto-tax' - since the usd price of btc has fallen since those trades - the ATO would get literally every satoshi i have. In what world is that fair?

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Devotee

Replies 1

Myles, this is done every year at tax time by those involved in trading to attempt to make a commercial gain, particularly in liquid asset markets.

You trade on June 30, this brings to account the reduction in value into your total capital gain for the year.

Then you buy July 1.
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Enthusiast

Replies 0

Jack,

 

I was curious as to whether that would be a solution. If all of the trades over the year are way too mind boggling to even begin to work out, can you just work out your tax in the following fashion..

1. Work out how much AUD you invested for the year

2. Say today I sell everything I have, on all exchanges, send it to an Australian exchange and sell it out into AUD.

 

Would I then be able to say, I invested (X) and as of today the total value, after having sold it all, is X. Therefore, tax me on the profit made.

 

I believe this would be wrong, as ATO wants to tax you on every individual transaction. I don't see why in reality my approach would not be reasonable? I really think shoving .csv logs, etc, from multiple different exchanges is going to be an auditing nightmare for anyone attempting to work it out.

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Community Manager

Replies 18

Hi @Myles, @SetiMaster, @Jack1 and @DanielH,

 

Great discussion!

 

We’ve started a consultation process to obtain feedback from the community on:

 

  • record-keeping as it relates to cryptocurrency transactions, and
  • exchanging one cryptocurrency for another cryptocurrency.

 

We’d love to hear from you! Join the discussion and have your say by going to our Let’s Talk consultation page before Friday 20 April 2018.

 

Thanks, Bree H.

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Devotee Registered Tax Practitioner

Replies 17

Everyone just seems to be over complicating this matter. There are a number of software solutions that allow you to download your transaction history and it does the conversion for you. 

 

Crypto should be subject to the same rules as any investment where the onus for record keeping is on the individual and being that there are viable solutions available saying its jsut too complex so I shouldn't have to fulfill my tax obligations shouldn't cut it.

 

If you make a trade and fail to put aside the provision for tax on that trade, that's simply a bad investment decison. If someone buys shares makes a huge profit and reinvests that profit and the share market retracts and they do not have the funds to pay the tax from their CGT profit they are responsible for putting themselves in that position crypto is no different ...people need to start planning ahead not trying to make a poor me argument because their cicumstances aren't how they envisioned 

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Newbie

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Daniel you are wrong. These software solutions do not work well at all for a number of reasons, a major one being that a lot of exchanges - especially the decentralised ones and the asian based ones do not keep records for you for more than a couple of months if at all. There are also a bunch of exchanges that have shut down during this period so all trades there can no longer be recovered.

Sure you can argue that you should manually keep track of these trades(a logistical nightmare which nearly no one will do) but this information on crypto-crypto trades being taxable was not made known to us until recently so even if i had 1000 hours to calculate my 2017-2018 tax owing i literally could not due to lack of data.

And this isn't even taking into account working out taxes on things not directly related to trades, such as getting hacked, buying icos, losing private keys, sending coins to the wrong address, loaning coins to margin traders, margin trading and getting liquidated, receiving airdrops/hardforks, mining, staking, masternodes. Good luck with that!

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Devotee Registered Tax Practitioner

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Every Crypto investor has been dealing with the same thing I have client's with over $1million in crypto investments and the software like cointracking works perfectly well for them, its actually able to deal with everyone of those events you listed.

It seems people think that because they forgot to plan ahead and keep the necessary records they should just simply be exempt or get special concessions. In the event that records are unattainable for whatever reason the ATO would simply expect the income or loss still be declared using reasonable basis calculations, so what ever the case you'll still have to declare by the lax approach taken with you record keeping you've simply just created a lot more work for yourself or your accountant 

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Enthusiast

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Cointracking and bitcoin.tax don't work for me at all. You can't rely on those to get it right! Crypto is a new breed, and to try to tax it like anything else is ridiculous. I suspect if you were to go through your clients records (that have used cointracking), you'd find huge inaccuracies.
Again, what exchange so we base the value of trades off of when trading crypto to crypto on foreign exchange? What is the value? How do you come to a determination of that considering huge differences in value from overseas/australian exchanges? Not to mention all that the last poster mentioned
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Devotee Registered Tax Practitioner

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Cointracking works fine if you take the time to configure it correctly, to assume Crypto should have all these special concessions is ridiculous I've been lodging crypto transactions in my returns since 2015 as I've stayed on top of it I haven't had any of the problems that you are inferring exist

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Devotee Registered Tax Practitioner

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I'm also curious how you feel these examples differ from someone utilising overseas stockmarkets or shares in an unlisted overseas company ,the onus is on these tax payers to calculate their position on a reasonable basis Cryptocurrency should be no different