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Sigh... another year, and another round of dealing with the Australian way of doing cryptocurrency taxation and reporting... and another year of griping about how onerous the requirements are, in terms of both recording keeping and reporting.
Well... I just did my wife's taxes earlier in the week... and despite being freelancers, it turned out to be relatively easy due to the insistence from me that we keep clear and ongoing records (and sort of despite the fact that my wife is pretty lax about it... but constant nagging doesn't hurt... much...).
The biggest pain point there was working through the online tax reporting tool from the Australian government, which is at best unclear with lots of big words, confusing flows, and references to non-existent "tests". Honestly, it is a bit of a mess... most people with salaried jobs will just accept the pre-filled information and just click submit. But for us, we are freelancers and sole traders... and so we fall in that annoying gray zone of individuals and businesses with income from many sources and outflows going all over the place.
However, once we figured out the system and gave the answers that allowed us to do what knew we needed to do (despite the weirdly long and bureaucratic names for simple things...)... we managed! Which got one headache out of my system... whether or not it would be actually possible for us to self manage our tax reporting... given that it needed to be in before 31st of October.
So... onwards to my reporting... which is quite similar in many ways... except there are stock dividends to report (thankfully, that was auto populated from the exchange)... and cryptocurrency. Now, the cryptocurrency reporting on the tax side is easy enough, I just need to fill in the crypto gains/losses and income... and luckily, we moved to Australia at the top of the last bull run, and that means that pretty much everything that I sell at the moment will result in a capital LOSS! So, I'm pretty happy about that!
But... the trick is getting to the numbers that will populate those fields, and collecting the various data across different exchanges and blockchains is a right pain in the arse, and I have resolved to do this at least once every few months instead of once a year! There are roughly 500k transactions that need to be logged and calculated... most of which is resulting in pretty much zero taxable changes, but it all needs to be logged.
I have learnt my lesson from last year, and have started individually importing an exchange/blockchain into a testbed account on Cointracking and from there, I start tidying up and making corrections before importing into the main account. Last year, I didn't do that for everything... and that resulted in an hilarious 500 million dollar income due to some borked imports.
This year... the same exchange caused problems in the import (Kucoin...)... but I was able to fix it all before it got integrated. I have a better idea of how the tax reporting rules work as well, and so I had to go back and fix a few things in the previous year reporting. And things are much better aligned in this year. Still, KUCOIN was having problems and I had to do manual adjustments to bring the numbers into line with the actual live amounts in my account.
Sigh... I think I have a week of tidying up the blockchain imports (which are relatively easier!)... and then I will just plonk down the numbers into the tax reporting software. We are doing our best... but this tax regime is completely unfit for purpose for cryptocurrency! It is not designed for millions of taxable events per year.... more like 10. Hopefully, this will change in the future... but I have found that Cointracking has been a great tool to use!
I can also be found cross-posting at:
Publish0x
Handy Crypto Tools
Ledger Nano S/X: Keep your crypto safe and offline with the leading hardware wallet provider. Not your keys, not your crypto!
: My first choice of centralised exchange, featuring a wide variety of crypto and savings products.
: The centralised version of WooFi. Stake WOO for fee-free trades and free withdrawals! This link also gives you back 25% of the commission.
: Decentralised perpetual futures trading on Arbitrum!
: If you need a regulated and safe environment to trade, this is the first exchange for most newcomers!
: Mixed feelings, but they have the BEST looking VISA debit card in existence! Seriously, it is beautiful!
: Access to early investor and crowdsale of vetted and reserached projects.
Cointracking: Automated or manual tracking of crypto for accounting and taxation reports.
: I still use this exchange to take part in the Spotlight and Burning Drop launches.
