One of the most common questions I have been asked lately from family, friends, and clients, is how to manage my cryptocurrency investments and the tax consequences.

The ATO have clear guidelines on how cryptocurrency buying, selling, and mining is taxed. If you’ve bought, sold or swapped/traded cryptocurrency, you will need to declare it on your income tax return.

In a previous blog we covered cryptocurrency and the tax consequences. As a refresher, I’ve listed the taxable events below:

You will pay tax for:

• Trading and exchanging cryptocurrency for cryptocurrency.
• Paying for goods and services worth $10,000+ with cryptocurrency.
• Gifting cryptocurrency to friends and family.
• Exchanging or selling cryptocurrency for fiat.

Start by asking yourself a few simple questions:

• Have you traded across lots of exchanges?
• Do you have tokens spread across multiple wallets?
• Did you forget to keep a record of all your transactions?

If you answered yes to any of these questions, then you may be feeling a little overwhelmed when it comes to figuring out your cryptocurrency taxable income. Don’t worry, your friendly accountants at Progue can help you out. There is a better way.

Just like businesses use MYOB or Xero to manage their accounts. There is specially designed software that can work out your cryptocurrency taxes, monitor your portfolio, multiple wallets, and exchanges. They quickly provide an easy-to-read report for tax time.

Software programs like Koinly, Cryptotracker, and Crypto tax calculator, can do all of this and more. They will not only save you time, but they could save you money. They will quickly show your capital gains, losses, and even calculate tax saving if you harvest your losses.

These programs are free to sign up and test. You only pay when you want to access tax reports. After you sign up, you select your country for taxable purposes, select your exchange or wallet, enter your address, and away it goes.

These programs allow you to track Capital Gains, Profit and Loss, Costs and Expenses, Income from interest, and much more. Everyone’s tax situation is different so be sure to change the cost basis to suit your needs. Options include, First in First out (FIFO), Last in First out (LIFO), and Highest in First out (HIFO).

It is always best to review the transactions from time to time to make sure their automatic calculations have all the necessary information. Each site is slightly different, but they will flag transactions for review.

In summary, these programs will stop you pulling your hair out while you try to find all your transactions and cost base. They provide deep insights into your cryptocurrency investments, even if you don’t need a tax report. In my opinion, the value they provide is worth the money. Each software program is slightly different, and I recommend always doing your own research and pick the one that best suits your needs. Happy trading, or holding…

Written for you by Amanda Bonavita