Reviewing and optimizing your crypto portfolio for taxes on Accointing is easy with its user-friendly platform and step-by-step guide.

Optimizing your Tax Data with Accointing by Glassnode

Make sure you have set-up all your wallets and tax settings correctly. To begin, navigate to the “Review” tab located on the left-hand side of the platform. This tab houses four sections: “Unknown currencies”, “Identify internals”, “Classify transfers”, and “Missing funds”.

First, head to the “Unknown currencies” tab and check for any coins that can’t be recognized by the platform’s database. If you are familiar with the coin in question, you can add it as a new currency. This will ensure that the platform can accurately calculate the gain or loss on the asset. If the coin is not recognized and you have never heard of it or interacted with it, it may be a scam coin. In this case, you can ask the platform to ignore it.

Next, check for any internal transactions that may have been missed. Internal transactions, which are transfers between two of your own wallets, are not taxable. The platform will flag potential internal transactions, but you should double-check that they are definitely between two of your own wallets. This will ensure that your tax bill is not higher than it needs to be.

To further optimize your portfolio for crypto taxes, you will need to review and classify any transactions that the platform couldn’t do for you. Classifications are labels that tell you why or how a transaction was made and are directly connected to how the assets are taxed. It is important to understand the tax implications of your transactions and to ensure that they are labeled correctly. 

Additionally, you can use the Missing Funds tool to find any missing transactions and make sure that your portfolio is complete. We recommend that you investigate any missing data, however, in the case that you cannot locate the right data, “Fix for me” will add a reconciliation transaction to make sure your portfolio is accurate.

By following these steps, you can stay on top of your crypto tax compliance and ensure that your portfolio is optimized for taxes. 

For additional information on filing your crypto taxes, including 1099 questions, extending your tax return, attachments and filing with multiple tax tools, check out our Crypto Tax Filing Guide 2023.

The information contained in this guide, including any supplemental materials, is for general information purposes and does not constitute financial, investment, legal or tax advice. The present content is not intended as a thorough, in-depth analysis, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Please consult your tax advisor.

Optimizing your Crypto Tax Data with Accointing by Glassnode

This crypto tax guide aims to help you understand the different sections of our Australian tax report and provide clear guidance on how to declare your crypto taxes to the ATO on your Annual Tax Return.

How to File Your Crypto Taxes in Australia - Accointing

ACCOINTING.com provides you with a tax report containing a summary of all tax-related cryptocurrency transactions for the selected tax year, in full compliance with ATO guidelines. It is available in both pdf and excel formats for convenience. First, let’s look at the ACCOINTING.com tax report and go through the different sections before delving into how to file your return.

Contains a summary of your realized gains and losses, taxable income and fees for the tax year.

For your convenience, the gains and losses have been broken out into short, and long-term, and your cost basis and proceeds totals are presented for each. You can find a summary by coin in the Taxable Disposals section and the full detail in the Tax Report Excel Version.

Your taxable income totals by category are also presented. You can find the details behind these totals in the Taxable income – Detail page.

Any fees that cannot be directly allocated to a specific asset will also be summarized for you. You can find the detail behind these fees in the Fees not included elsewhere – Detail pages.

This page provides a summary of your nontaxable disposals and nontaxable income.

Lists a summary of your taxable sales or trades by coin. This will include all taxable sales or exchanges subject to capital gain taxes and will break out your gain or loss by coin, and indicate the short-term as well as the long-term portion. Please note that this is only a summary – for the full detail please see the Tax Report Excel File.

Provides your taxable income such as rewards, airdrops, mining, staking, interest, hard forks or similar types of income events. You can find the full detail in the Tax Report Excel File.

In Australia, if you are filing a tax return as or on behalf of an individual, there are two ways to report crypto assets: online, through myTax, or via paper forms. Whatever method you use, the ACCOINTING.com report contains all of the information you need to file your taxes. All you need to know is where to enter those figures.

On the my gov website, you can sign in to your ATO myTax account or set up a new one.

Verify that your personal and contact information is correct, then press “Next.”

Now verify that your financial institution data is correct, and then press “Next.”

Under the section titled “Personalize your 2021-22 return” section, provide your personal information as required.

Depending on your crypto investments, you may need to select up to three options in this section:

For crypto capital gains or losses, check the box next to “You had Australian interest or other Australian income or losses from investments or property.” Then, in the new drop-down menu, check the box next to “Capital gains or losses that are not from a managed fund.” 

If you had crypto income, check the box next to “Other income not listed above.” 

Finally, check the box next to “You had deductions you want to claim” and then check the box next to “Other deductions” from the new drop-down menu. Complete the rest of this section for yourself, and then click “Next.”

Now on step 4 “Prepare your 2021-22 return” page:

Complete the rest of your non-crypto-related tax return.

Start with the capital gains or losses by clicking “add/edit.” In the box under “Net capital gains,” copy and paste the figure under “Sum of total gain and loss” (if positive) on the first page of your ACCOINTING.COM report. Alternatively, if you have a capital loss for the year, enter this figure into the box under “Net capital loss carried forward to later income years.” For the question, have you applied an exemption, rollover, or additional discount, select “No.” Press save and continue.

For crypto income, select add/edit next to other income. Next to “Any other income” select “add.” In the drop-down menu under “Type of payment” select “Other”. For the description, write the type of your crypto income – for example, crypto airdrop, mining, staking, etc. On the first page of your ACCOINTING.COM report, in the taxable income summary section, copy the figure next to the type of income you described and paste this into the amount box. Press save and continue.

For deductions relating to crypto, select “add/edit” next to “Deductions.” Next to “Other deductions,” select “add.” Now, from the drop-down menu under “Type of deduction,” select “Deductions relating to financial investments.” Proceed by adding a description (i.e. margin fees). On the first page of your ACCOINTING.COM report, you’ll see a section titled “Fees not included elsewhere”, copy the figure next to the total. Again, these are fees that cannot be directly allocated to a specific asset. Press save.

Alternatively, you can declare your crypto activity on paper and send the forms by mail. You will need two forms: one for capital gains and one for income.

On your Tax Return for Individuals, select “YES” on question 1 of the Taxpayer’s declaration.

On the Tax Return for Individuals (supplementary section), complete question 18:

Enter the total amount of gains in the 18H “Total current year capital gains.”

Enter the total capital loss in the 18V “NET capital losses carried forward to later income years.”

The final amount is reported at the 18A “NET capital gain.”

Your crypto income is declared on question 2 of the Tax return for individuals 2022 (NAT 2541).

If your total capital gains or losses for the current year exceed 0,000, you must complete the capital gains tax (CGT) schedule.

The tax year in Australia runs from July 1 to June 30 of the following year. If you are an individual filing your own tax return for July 1, 2021 – June 30, 2022, the deadline is October 31, 2022. 

If you hire a registered tax agent or accountant, they will generally have special lodgment schedules and can file returns for clients later than October 31. Speak to your tax advisor if you are unsure of your deadline.

The ATO is very clear in their guidance when they state that:

“You need to keep details for each crypto asset as they are separate CGT assets. Keeping good records is essential for meeting your tax obligations.”

We recommend keeping all of the following records indefinitely:

Hot or cold crypto wallet addresses containing taxpayers’ crypto transactions

Other records, such as transaction history files from exchanges (and wallets)

Bank statements or other records showing the deposits and withdrawals of fiat currency

Transaction history containing all of the following information:

Units of crypto and value in AUD at the time of the transaction

Fortunately, all of this information will be automatically kept for you with Accointing.com. You should keep a copy of your tax report, all other files provided (such as the full data set), as well as a copy of any CSV or excel files uploaded to Accointing.com. If you’ve used any API and blockchain connections, keep the blockchain address and API keys. In the case you ever get audited, you want to be able to recreate the results.

The information contained in this guide is for general information purposes and does not constitute financial, investment, legal or tax advice. The present content is not intended as a thorough, in-depth analysis, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Please consult your tax advisor.

How to File Your Crypto Taxes in Australia

The following describes how deposits and withdrawals are handled at Accointing.

Australia Specific Classifications - Accointing by Glassnode

1 – Airdrops are considered to be ordinary income and subject to Income Tax at the time of receipt. However, if the tokens acquired are part of the “initial allocation” of a project, i.e., they have not been traded prior to the airdrop, they would not be considered ordinary income or capital gain.

2 – ICO, OTC and Swap classifications act similar to orders. The deposit (acquisition) of the new coins is not taxable, but the withdrawal (coins traded) is taxable. 

3 – Adjustments from use of reconcile function due to variances between imported data and actual balances. Disclosed separately in your tax report.

4 – Margin gains, losses and fees are reported separately in your tax report. 

5 – Fees that are allocable to a specific crypto asset are included as part of your tax basis within your taxable disposals. Internal fees are also included within your capital gains per the ATO guidance. These fees represent other fees such as fiat deposit fees that are not directly allocable to a specific crypto asset.

6 – Treated as nontaxable. The amount is reported separately in your tax report as it may be deductible in limited circumstances; refer to the Tax Guide for deductibility.

Australia Specific Classifications

Cryptocurrency and other digital assets are taxable in Australia. ATO’s Cryptocurrency and Tax Page provides the tax authority on crypto taxes. In this tax guide, we’ll provide you with the ins & outs of crypto tax regulations in Australia and strategies for minimizing your crypto taxes.

Crypto Tax Australia: The Definitive Guide 2023 - Accointing by Glassnode

Cryptocurrency and any digital assets are taxable in Australia. ATO’s Cryptocurrency and Tax Page provides the tax authority on crypto taxes. In this tax guide, we’ll provide you with the ins & outs of crypto tax regulations in Australia and strategies for minimizing your crypto taxes.

The Australian Taxation Office (ATO) has been keeping a close watch on cryptocurrency traders since 2014. In general, HODLing crypto is not taxable. However, it is the gains and income that the ATO considers taxable. Any Australian citizen buying, selling, transferring, mining, staking, airdropping, gifting, or lending cryptocurrencies would probably classify these expenses as income or gains. These should always be reported based on the Australian dollar value of the transaction. While cryptocurrency tax can be very complicated, we can simplify everything by grouping transactions into the general rules below:

If you purchase a coin or token and sell (or trade it) for more value than what you paid for it, this is a taxable gain. The key here is that every trade is taxable – selling crypto back into fiat (any government-issued money) or trading one crypto into another. This applies if you purchase a coin, token, NFT, or any other type of financial instrument representing a crypto asset, such as a futures contract. Just like gains are taxable, any capital losses from selling or trading a coin for less than what was acquired are deductible for tax purposes, subject to certain restrictions.

Proceeds from sale – cost basis (purchase price) = taxable gain or loss

Proceeds from sale: If you are converting into fiat, this is the amount of fiat you get for your crypto. If you are converting to another crypto, it is the value of the acquired crypto at the time of the trade.

Cost basis: What you acquired your crypto for – if purchased with fiat, is the amount you bought it for plus any fees on the trade. If purchased with another crypto, it’s the value of the crypto at the time of acquisition plus any fees on the trade.

If you transfer crypto from one wallet to another, the official ATO guidance  states that: 

“Transferring crypto assets from one digital wallet to another digital wallet is not considered as a disposal as long as you maintain ownership of it. If your crypto holding reduces during a transfer to cover a network fee, the transaction fee is a disposal and has capital gain consequences.”

Any income from crypto is subject to income taxes at the ordinary marginal rate of the taxpayer. The list of taxable crypto events includes (but is not limited to):

While crypto income can have many forms, the rule of thumb is that if you open up your wallet (or exchange account) and you have more coins/tokens than you had before, then the new coins/tokens received should generally be recognized as ordinary income based on the value of the coins at the time that the taxpayer obtains control of the coins. 

Certain exceptions apply such as chain splits (hard forks) and initial allocation airdrops. A crypto project can make an initial airdrop of tokens representing the first distribution of its tokens. Such tokens are the “initial allocation” if the project’s tokens have not been traded prior to the airdrop. In this case, the ATO states that, upon receipt, they will not be considered ordinary income or a capital gain. Only when the tokens are disposed of does a CGT event occur. If receiving new coins results in a nontaxable transaction such as these, your tax basis is /bin/sh in the coins, meaning that when you dispose of them your proceeds will generate a gain for the same amount.

Purchasing crypto (or any other digital asset similar to cryptocurrencies, such as NFTs) with fiat is not a taxable event. This is true whether the crypto is purchased through a bank account or a credit card transaction. However, considering that you will have to pay taxes when you sell or “dispose” of your crypto, it is crucial to keep an accurate record of the purchase to determine the cost basis of the transaction. Fortunately, Accointing.com will automatically keep track of all this information.

Cost basis of acquired crypto = amount paid for crypto in AUD + fees to acquire

Purchasing crypto (or any other digital asset similar to cryptocurrencies, such as NFTs) with crypto or another digital asset is a taxable event as you are disposing of an asset on which you have to recognize a gain or loss. 

Taxable gain or loss = proceeds from the sale (fair market value of acquired crypto) – cost basis of crypto given up.

Proceeds from the sale (fair market value of acquired crypto) = cost basis of acquired crypto (relevant for future dispositions)

The acquisition of the new crypto (coin, token, NFT, etc) is not itself taxable, but using another asset to purchase this is the taxable event. This is basically a barter transaction. Using a crypto to purchase another crypto is the same as if you sold the first crypto at its fair market value and immediately used those funds to purchase the new asset. The first transaction would be a taxable disposition in which a gain or loss has to be recognized, and the second transaction would be an acquisition for fiat. With crypto-to-crypto, you are essentially doing both of the above in one transaction. Therefore a gain or loss has to be reported on the asset given up.

Holding a crypto or digital asset is not taxable. You would not trigger a taxable event until you sell, trade, burn or otherwise dispose of the asset. If you are earning income (rewards, staking, yield, etc.) on this asset, that income is taxable as ordinary income.

Transferring crypto to your own wallet, whether a hot or cold wallet, is not a taxable transaction. As previously mentioned, be aware that if crypto holdings are reduced to cover the network fees for a transfer, the transaction fee is a disposal with capital gain implications. Careful – some tax reports assume that transfers out are taxable as they do not know you are transferring crypto to yourself. Accointing.com will find the possible matches for internal transfers and the user verifies them through the review steps. All you have to do is select the transfer and approve it. This will classify the transaction as non-taxable transfers to yourself and link the tax basis accordingly. 

The sale or exchange of any crypto asset is a taxable disposal. Taxpayers must report their realized gain or loss on these transactions on their Annual Tax Return for Individuals or online through myTax (refer to “How to File Your Crypto Taxes in Australia with Accointing.com”). This taxable gain or loss is subject to capital gains tax, the rate of which depends on whether the gain is a short-term or long-term capital gain.

Please note that if the taxpayer is a business, the sales must be reported on that entity’s business tax return.

What counts as a taxable disposal of a crypto asset for Australian taxpayers?

The sale of crypto for fiat (AUD, USD, Euro, GBP, etc.)

The sale of crypto for a stablecoin (USDT, USDC, DAI)

The trade of a stablecoin for crypto, another stablecoin or fiat

The purchase of any goods or services with crypto

In every case, whenever you have a taxable disposal of a crypto asset, you must calculate and report your gain or loss:

Taxable gain or loss = Proceeds from sale – cost basis 

Proceeds from sale: The amount of fiat received for the crypto asset sold or the fair market value of the crypto asset acquired in the transaction.

Cost basis: Cost in AUD of the crypto asset disposed of. If the asset was acquired with another crypto, the fair market value in AUD at the time of acquisition.

Every time you trade, sell or dispose of a crypto asset it is a taxable disposal. Even trading one crypto for another, or trades with stablecoins are considered taxable disposals. If it has a different ticker on CoinMarketCap, it is a taxable event. This is also true of assets not listed on CoinMarketCap, such as individual NFTs, liquidity pool tokens or futures contracts. 

“You must report a disposal of crypto for capital gains tax purposes. Disposing includes when you:

trade, sell, gift or donate crypto assets

convert crypto to a fiat currency (a currency established by government regulation or law) – for example, to Australian dollars.”

Therefore, when considering how cryptocurrency is taxed, one must look to tax law on property transactions, which can be found on the official Capital Gains Tax page.

Taxation of Short-term capital gains vs long-term capital gains 

If you hold your crypto for more than 12 months, your gains will be taxed at a 50% discount as compared to short-term gains. Short-term capital gains will be taxed at your ordinary tax rate, which depending on your income, will range from 19% to 45%. The income tax brackets for 2021 are as follows:

Source: https://www.ato.gov.au/rates/individual-income-tax-rates/

Please note that as an investor, you can either use FIFO, HIFO, or LIFO to calculate capital gains. However, as a trader, LIFO is not accepted. Accointing.com uses FIFO as a default but the tax method can be changed within the tax settings.

Although the term “Wash Sale” has no precise meaning, with crypto assets, a wash sale occurs when an investor sells a crypto asset at a loss but buys the same or substantially the same asset in a short period of time. The sale and purchase cancel each other out, resulting in no change in the owner’s economic exposure to the asset. This allows the taxpayer to incur a loss to offset a gain already realized or expected to be realized. The ATO has warned that its sophisticated data analytics can identify wash sales by accessing data from share registers and cryptocurrency exchanges. In instances where the ATO identifies such activity, the capital loss is disallowed, which means a greater gain or smaller loss to the taxpayer. 

According to the ATO, if the cryptocurrency you transact with is a personal use asset, a capital gain/loss can be avoided. The crypto asset is considered a personal-use asset whenever it is used to acquire items purchased for less than A0,000 for personal use or consumption. However, this A0,000 personal use asset rule can only apply in the rare instances where the cryptocurrency is acquired and immediately disposed of to purchase personal property or services. If personal goods or services are purchased using cryptocurrency initially intended to be held as an investment, the exemption does not apply and the gain or loss must be recognized. Critical to determining whether it is a personal use asset is the time of disposal of the cryptocurrency. The longer you hold the cryptocurrency, the less likely it is to be considered a personal asset, regardless of whether you eventually use it to purchase personal consumption products.

Whether you have lost your crypto or got it stolen, a capital loss may be possible to show to the ATO. The authorities would require documents and information to prove the ownership as evidence. Some of the evidence required includes:

date when you acquired and lost the private key

the amount of crypto at the time of loss or theft

transactions linking your identity to your wallet

transactions from a digital currency exchange used to verify your account with your wallet

Gifting cryptocurrencies is considered a disposal due to the original intention to hold the cryptocurrency, even if no money is exchanged. It is, therefore, subject to either ordinary income tax or capital gains tax.  Also, remember that even if you donate cryptocurrencies to a deductible gift recipient (DGR) and then claim a deduction, it could be considered a profit-making scheme. The ATO will ask you to keep a record of crypto asset transactions, including the date you donate them and the market value of the cryptocurrency at that time. Donation of crypto assets to DGRs does not usually involve the payment of capital gains tax when:

The gift is made under a will (testamentary gifts) – however, you cannot claim a tax deduction.

It is donated under the Cultural Donations Program.

Crypto assets donated are considered personal use assets.

You can only claim a tax deduction for gifts or donations to organizations that have a status as a DGR. To claim a tax deduction for a gift or donation of a crypto asset, it must meet:

gift types, requirements, and valuation rules

Cryptocurrency taxable income can take on many forms and names, and you may not find guidance from the ATO on all of these. All crypto income is taxable based on the fair market value of the coins/tokens received when the taxpayer obtains control of the asset, unless the transaction type is specifically excluded by the ATO, such as chain splits (hard forks) and initial allocation airdrops.

This applies to mining, staking, interest, rewards, liquidity pool rewards, certain airdrops,  lending income, bounty income, node income, crypto for completing quizzes, etc. If you have more coins/tokens than you had before, the new coins/tokens are taxable income unless specifically excluded from taxation, in which case the coins acquire a A/bin/sh cost basis. Adding funds is not considered income as this is a transfer of fiat from your bank or credit card.

Under ATO rules, the type and amount of tax you pay will depend on whether you mine as a hobbyist or as a business. Check this section of the ATO website to find out if you are mining cryptocurrencies as a business. 

As a hobbyist, you do not have to declare your income after receiving the mined coins. The mined coins will be subject to capital gains tax on disposal in the future, but will have a A/bin/sh cost basis. 

If your mining operation qualifies as a business, you must declare the tokens’ fair market value at the time of receipt. All income you receive from a mining pool/service or your own mining equipment is taxed as ordinary income and will have to be declared on your business income tax return. However, business miners can deduct costs such as equipment, subscription fees, and electricity costs from their taxes.

Income taxes apply to staking rewards. Staking offers cryptocurrency holders a way to put their digital assets to work and generate passive income without selling them, similar to earning interest on a bank account.

According to the ATO, the money value of additional tokens is ordinary income when the tokens are received. You must report the income on your tax return as “other income.” When you dispose of crypto assets earned through staking, you must determine if you made a capital gain or loss. Once you connect your exchanges and wallets to Accointing.com, we will detect staking rewards and aggregate the amount under the “Staking Income” line on your tax report’s “Taxable Income” section.

In most cases, such as when you receive airdrops as part of a marketing campaign, the ATO considers airdrops to be ordinary income and subject to Income Tax at the time of receipt. In addition, if you sell coins or tokens from an airdrop and make a capital gain, you must pay capital gains tax. However, if the tokens acquired are part of the “initial allocation” of a project, i.e., they have not been traded prior to the airdrop, they would not be considered ordinary income or a capital gain. If the project issues these tokens for free, they have a cost basis of zero (A/bin/sh). Since these coins have never been traded, they have no market value at the time of the original airdrop. If these tokens are not free, i.e. you have to pay to receive them, the cost basis of the tokens will be the amount you have paid to acquire them.

Remember that only when you dispose of the tokens does a CGT event occur. If you keep the tokens for 12 months or more, you can benefit from a 50% CGT discount.

A chain split occurs whenever two pieces of blockchain have the same history but take different paths for the future.The most popular example is when Bitcoin Cash (BCH) split from Bitcoin (BTC) back in 2017. Holders of the base coin receive an amount of the new coin and the value of this new one is considered neither ordinary income nor capital gain at the time of receipt. Whenever this occurs, the new holding is treated as a crypto investment with a cost basis of A/bin/sh. This means that you do not pay any CGT tax; however, when you dispose of it, you calculate the capital gain and tax accordingly using a A/bin/sh cost basis. 