So you have Cryptocurrency – How do you work with a tax agent?

This year the ATO has informed all individuals who have been trading Cryptocurrency in 2021 that they expect to see the Cryptocurrency capital gains to be recorded on the tax returns.

This has created a steep learning curve for a number of people who have been happily independently lodging their own tax returns until now.

This blog is designed to outline what information you should gather before engaging a tax agent to get your taxes completed.

  • for each exchange you use you need to provide
    • csv file of all transactions from when you started trading (may be over a few years)
    • a financial report (if available) for each financial year you have traded
  • for each hard wallet (such as ledger or trezor) you will need to provide
    • csv file of all transactions from when you started trading
    • screen shots of the transactions so we can be confident we have a full list of all transactions
    • Balance as at end of year so we can reconcile and be sure we match your records correctly.
  • detailed evidence for any transaction where you sent cryptocurrency to friends/third parties which could appear as
    • invoices
    • contractual agreements
    • emails
    • bank statements showing the transaction as the payment associated went through your bank account

Cryptocurrency reports need to show what currency they are being displayed in. Our preference is AUD (Australian Dollars) but USD is common – sometimes the reports are not clear which currency is being displayed so its important to establish that when providing these reports.

It is important to understand that the more complex your transaction arrangement the more time it will take to process and calculate your tax return. Whilst we make every attempt to keep transaction processing time down, you can find our bill to you might be as high as $10 per trade to calculate the CGT element. This is generally NOT the case for most of our clients but when things get complex or reports are not supplied in entirety this can be reasonably expected as an outcome.

There are a few tax programs available for the individual who does not wish to supply this level of detail to us and we encourage those clients to consider using them as the above information would be required by most tax agents as a standard rule.