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Finance Investment, Taxation

The biggest five mistakes crypto investors make at tax time

New Romans 3 mins read
  1. As we enter a new financial year, Crypto Tax Calculator has revealed the five biggest mistakes Australian cryptocurrency investors make at tax time. The news comes as the Independent Reserve Cryptocurrency Index (IRCI) shows that around 45% of Australian crypto investors don’t understand how their crypto is taxed in Australia and 54% have called for the Australian Tax Office to improve clarity around what is taxed, when and why.

    “The biggest mistake crypto investors make at tax time is not keeping accurate and detailed records. Most crypto investors don't realise that many transactions involving cryptocurrencies could be a taxable event,” says Founder and CEO of Crypto Tax Calculator, Shane Brunette.

    “Whether you’re selling, trading one crypto for another, or using crypto to purchase goods and services, these activities can trigger capital gains or income tax. Even receiving cryptocurrencies through staking rewards, airdrops, or as payment is subject to tax obligations.

    “It’s critical to prioritise tax planning and compliance from the very beginning. We know the Australian Tax Office is placing increased emphasis on crypto, and you don’t want to get caught with a hefty tax bill, or penalties for noncompliance,” he says.

    The 5 biggest mistakes crypto investors make at tax time:

    1. Not keeping detailed records

    It’s imperative to maintain comprehensive records of all crypto transactions, including dates, amounts, types of transactions (e.g., buy, sell, trade), and the value at the time of each transaction. This includes transactions on all platforms and wallets.

    2. Missing taxable events

    Investors should be aware of what constitutes a taxable event. Common taxable events include selling cryptocurrency for fiat currency, trading one cryptocurrency for another, and using cryptocurrency to purchase goods or services. Simply holding cryptocurrency is not a taxable event.

    3. Miscalculating gains and losses

    If cryptocurrencies are sold or traded there’s a need to calculate the difference between the selling price and the purchase price (cost basis). Short-term gains (held for less than a year) are typically taxed at higher rates than long-term gains (held for more than a year).

    4. Crypto-to-crypto transactions, track airdrops and forks haven’t been considered

  2. Ensure that all income related to cryptocurrencies is reported. This includes mining income, staking rewards, and any interest earned from crypto savings accounts.
    It’s important to note that trading one cryptocurrency for another is a taxable event. For instance, trading Bitcoin for Ethereum requires reporting any gains or losses on the Bitcoin etraded.

  3. 5. Overlooking professional help

  4. Consulting a tax professional who is knowledgeable about cryptocurrency and utilising crypto tax software can make light work of keeping detailed records.

  5. “While it's crucial for crypto investors to stay proactive and informed about their tax obligations, it doesn’t need to be a headache. Regularly reviewing tax regulations, seeking professional advice, and utilising available resources can help ensure that you remain compliant and make the most of your investments,” says Brunette.


Key Facts:

● 45% of Aussie crypto investors don’t understand how crypto is taxed in Australia.
● More than half of Aussie crypto investors have called for the Australian Tax Office to improve clarity around what is taxed, when and why.


About us:

ABOUT THE INDEPENDENT RESERVE CRYPTOCURRENCY INDEX (IRCI)
The IRCI is an annual cross-sectional survey of over 2,100 everyday Australians, conducted by PureProfile. The index is a single rating out of 100 designed to reflect four key aspects of Australian attitudes towards cryptocurrency: awareness, adoption, trust and confidence.
ABOUT INDEPENDENT RESERVE
Established in 2013, Independent Reserve is Australia’s trusted cryptocurrency exchange and OTC trading desk. Over 300,000 customers from Australia, New Zealand and Singapore trust Independent Reserve to easily trade Bitcoin, Ethereum, XRP and other major cryptocurrencies. Independent Reserve offers a range of innovative features, including AutoTrader, crypto OTC trading desk, API integration and world-class security.


ABOUT CRYPTO TAX CALCULATOR
Crypto Tax Calculator is on a mission to free crypto enthusiasts from their tax nightmare. Founded in 2018 by Sydney brothers Shane and Tim Brunette, CTC provides the tools to help customers identify, track and organise all of their crypto activity across hundreds of exchanges and blockchains with ease and accuracy. CTC is helping investors, traders and accountants by providing clear and secure records. For more info visit cryptotaxcalculator.io.


Contact details:

Katie Sanders

New Romans

0406 316 907

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