The tax implications of crypto trading are not yet well understood. Every time you sell or swap one cryptocurrency for another, a capital gain event is likely to have occurred, and knowing how to record your crypto transactions can be a challenge.

Depending on your level of crypto trading calculating the capital gain or loss made on each sale can be a timely process. This is due to a number of factors such as –

  • The total number of crypto transactions made during the financial year – for some it’s hundreds or thousands.
  • The dates and amounts for both the original purchase and sale are required.
  • At times you might only dispose part of your holding at a time, requiring an apportionment of the original cost to be applied to the sale.
  • At times you may also be swapping one coin directly for another coin, each swap is considered as a buy & sell transaction.
  • You may also be purchasing a number of coins at once as part of a bundle purchase.

Most platforms used to trade cryptocurrencies (such as Coin Spot, Coinbase & Swyftx) provide you with a year end trading report, however generally these reports just give you a transaction listing for each buy and sell made using that platform. They don’t actually calculate the capital gain or capital loss made on each transaction for that financial year. Asking your accountant to manually work through the year end report generated by your trading platform is a timely process and will result in a significantly higher fee for the time taken to prepare your income tax return.

Fortunately there are now some third party software providers that can assist if you are happy to upload or link your trading data. We do not endorse any particular provider but have provided some sites that we’ve seen clients using to date:

It’s important that you do your own research before you subscribe to a particular service as there are different packages and options – such as allowing direct access to your trading platform to automatically obtain future transactions.

Also be mindful that it’s fairly new territory and the software might not be perfect. It’s always your responsibility to review the report to ensure that it is accurate and reflects your trading activity. We haven’t noticed any major issues so far, although we’re aware there may be reporting inaccuracies where clients have transferred the coins from one wallet to another and not necessarily sold them.

The subscription cost to these platform will be tax deductible so please remember to keep a copy of your invoice.

Other related blogs:

Tax treatment of crypto trading
Buying Bitcoin will I pay tax?

Author: Rhys Frewin