Filing Your Australia Crypto Tax? Here's What the ATO Wants
The ATO says crypto investors need to declare their crypto capital gains (or losses), as well as any income from crypto in their annual tax return, due on the 31st of October 2022. If you're totally lost when it comes to what you need to include in your crypto tax report - don't panic. We're covering everything you need to include in your Australian crypto tax report and how Koinly can help.
What should be included in a crypto tax report?
We’ve got our ultimate Australia crypto tax guide if you want to learn in-depth about how the ATO taxes crypto, but suffice it to say - they’ve set out some clear guidelines for how crypto is taxed and what you’ll need to report. In summary:
You need to report your net capital gain from crypto, minus any capital losses, minus any long-term Capital Gains Tax discounts. If you only have a loss, you’ll still need to declare this to carry it forward to future tax years.
You need to report your total income from crypto as additional income.
You’ll report both of these in your annual tax return, which you can file online with ATO’s myTax.
You need to report your capital gains (or losses) and any crypto income for the previous financial year (1st of July to the 30th of June) by the 31st of October.
In other words, you need to identify your capital gain or loss each time you dispose of crypto by selling, swapping, spending, or gifting it between the 1st of July 2021 and the 30th of June 2022, as well as identify the fair market value of any crypto income in AUD on the day you received it throughout the financial year. If you’d like to reduce your tax bill, you’ll also want to identify any potential deductions from financial investments relating to crypto - like margin fees or even tax preparation software costs.
When you’re filing with ATO, you’ll only need your total figures including:
Your total current year capital gain.
Your net capital gain (after any applicable CGT discount or offset losses).
Or your net capital loss carried forward to later income years.
Your total amount of income from crypto (in AUD).
Any expense amounts if applicable.
This said, the ATO has made it clear it's cracking down on crypto tax evasion for several years now. If you are unfortunate enough to be on the receiving end of an ATO crypto tax audit - you’ll also need records proving the declarations in your tax returns. As a minimum, the ATO may want to see:
The date you acquired and disposed of a crypto asset.
The price your crypto was bought and sold for in AUD.
The reason for the transaction and involved parties.
Receipts or other proof of transactions.
Records from all the exchanges, wallets or blockchains you use.
Records of expenses and accountant costs.
Records of tax preparation software costs.
The ATO recommends keeping records for at least five years and using professional crypto tax software to do so (Koinly can do this for you).
With all this said - let’s look at how to create a crypto tax report for the ATO.
How to create a crypto tax report for the ATO
You can do it yourself… with a lot of spreadsheets and a calculator. You’ll need to get your transaction data for every exchange, wallet, or blockchain you use and then identify your cost basis, both your short-term capital gains and losses and long-term capital gains, as well as the fair market value of any crypto income in AUD on the day you received it. You’ll also need to decide which cost basis method you’re using (the ATO allows FIFO, HIFO, and LIFO for individual investors) in your calculations.
Yep…it’s a lot of work. Which is why most Australian investors opt to use crypto tax software instead.
With crypto tax software like Koinly, all of this is automated for you. All you have to do is sync the wallets, exchanges, and blockchains you use via API or by uploading a CSV file and it’ll do all the calculations for you (you can even pick the cost basis method you want to use). Once all this is done, just download your ATO myTax report - which includes all the information you need to file with the ATO come the tax deadline.
Think it sounds too good to be true? Let’s take a look at a Koinly Australia crypto tax report to see how it ticks all the boxes to meet the ATO requirements for crypto tax reporting.
Setting up Koinly for Australia crypto tax reporting
Once you’ve signed up for your free Koinly account - you’ll need to pick your settings. This includes your home country, base currency, and the cost basis method you want to use. The default cost basis method for Australia is FIFO and you can later try out other ATO-compliant cost basis methods like HIFO or LIFO to see how they impact your crypto tax liability.
You’ll also have a variety of other settings to toggle on or off. These are the default settings for ATO crypto tax reporting:
Next up, sync everything you use with Koinly. Just go to wallets, add a new wallet, and search for the exchange, wallet, or blockchain you want to add, then sync via API or upload a CSV file of your transaction history from that wallet.
Once you’re set up, Koinly will get to work on calculating your crypto taxes and generating your ATO crypto tax report.
What’s in a Koinly Australia crypto tax report?
For Australian investors - Koinly generates the ATO myTax report. This crypto tax report has all the information you need to file with the ATO using the myTax portal.
From your settings, Koinly will know the financial year you’re reporting on. The contents of your crypto tax report include:
Capital gains summary.
Other income summary.
Let’s take a more in-depth look at each with our crypto tax report example.
Australia crypto tax report: capital gains
Your ATO myTax report includes everything you need to report using the myTax portal. You just need to copy your figures from your Koinly report into your tax return. This includes:
Your total current year capital gains (your profit, before any losses or deductions).
Your net capital gains (your profit after deducting capital losses).
Your net capital gains after CGT discount (your profit factoring any applicable 50% long-term Capital Gains Tax discount).
Your net capital loss.
And so you get an idea of how neatly this matches up with what you need to report in the ATO myTax portal:
Australia crypto tax report: other gains
Your other gains are any transactions tagged as realized P&L in Koinly. They generally refer to crypto transactions like derivatives or futures trades as the tax treatment of some of these products may be different depending on the scale at which you’re trading. Your other gains section will include:
Splitting these out allows you to report these how you need to with the ATO. You should seek advice on whether your transactions will be considered that of an individual investor or a trader if you’re unsure.
Australia crypto tax report: income
The other income summary section of your ATO myTax report includes everything you need to report crypto income to the ATO. Koinly will have already identified the fair market value of any tokens considered income on the day you received them in AUD, so the figures you see in your report are just sums of this. Your other income summary section will include a breakdown of the different types of income you’ve made throughout the financial year and a total figure. This could include:
Mining - if mining as a trader.
The ATO doesn’t require you to report each different type of income, but you can do if you wish to. You can add crypto income under other income in ATO myTax and just copy your total income figure from your Koinly report:
Australia crypto tax report: expenses
Finally, we have your expenses. These are transactions marked as costs in Koinly that have not been included in your capital gains calculations, so they won't include your trading fees which will already be part of your cost basis calculations. Your expenses could include a variety of fees, such as:
Margin trade fees
Margin interest fees
Depending on whether you're trading as an individual investor or a trader and your specific financial investments these may be tax deductible. You can deduct crypto expenses within ATO’s myTax - either as a deduction relating to financial expenses or other deductions.
Ready to file? Check out our guide on how to file crypto taxes with myTax.
Other Australian crypto tax reports
While the ATO myTax report contains everything you need to file by the 31st of October, we’ve got many other crypto tax reports you might find useful should the ATO ever require more information. This includes the Complete Tax Report which has a more detailed breakdown of each individual taxable transaction, an asset summary and your end-of-year holdings as well as the data sources used to compile your tax report.
Crypto tax made simple
As you can see, your Koinly ATO myTax report has everything you need to easily file your crypto taxes using the ATO myTax portal, as well as any additional information the ATO may request during an audit.
Better still, you only pay when you want to download your report - so you can try Koinly totally free of charge.