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Rising Aussie crypto ownership offers accountants new prospects but not without complex tax hurdles. Help your clients navigate the ATO's scrutiny with Crypto Tax Calculator’s guidance.
With ownership of cryptocurrencies in Australia on the rise, accountants face both an opportunity and a challenge. While crypto opens the door for new revenue streams and client bases, they also introduce intricate tax considerations unique to digital currencies. With the ATO's keen eye on cryptocurrency transactions, it's imperative for accountants to be equipped with not only the latest information but also actionable strategies to guide their clients effectively.
Here are 5 key areas to educate your clients on so they don’t find themselves with a tax nightmare.
1. Leverage Dedicated Crypto Tax Platforms for Accurate Compliance:
Transaction data from crypto exchanges and wallets is often irregular and complex, making manual tax calculations not only cumbersome but often error-prone. To ensure accuracy and ATO compliance, using specialised platforms is paramount.
Guidance: Strongly recommend Crypto Tax Calculator to your clients. It seamlessly integrates with 800+ exchanges and wallets for easy transaction data import, tailoring calculations to ATO guidelines. By using Crypto Tax Calculator, clients can save time, ensure accuracy, and generate tax reports seamlessly.
2. Beware of 'Crypto-to-Crypto' Transactions:
Many believe that unless they convert cryptocurrency back into fiat currency, it's not a taxable event. This misconception can lead to unexpected tax obligations.
Guidance: Make it clear to your clients that trading one cryptocurrency for another (e.g., Bitcoin for Ethereum) is considered a disposal and a taxable event in the eyes of the ATO.
3. Set Aside Tax for Every Crypto Transaction:
One of the major pitfalls many crypto traders fall into is not anticipating the tax implications of their transactions until it's too late.
Guidance: Advise clients to allocate a percentage of each transaction (e.g., sales or trades) into a separate 'tax' account or fund. This way, they have a dedicated reservoir to draw from when tax obligations arise. It can be helpful to provide a rough percentage they should set aside each time.
4. Understand the Distinction Between Personal Use & Investment:
The ATO views cryptocurrency used for personal consumption (like buying a product) differently than cryptocurrency kept as an investment. These distinctions can greatly affect tax obligations.
Guidance: Ensure your clients can differentiate between tokens held for personal use and those held as investments. Personal use assets might be exempt from capital gains tax under certain conditions.
5. Proactive Tax Planning and Regular Check-Ins:
Cryptocurrency markets are notoriously volatile, which can significantly affect capital gains and losses. Proactively managing this can result in optimised tax outcomes.
Guidance: Encourage clients to stay in regular touch with you, their accountant, throughout the year. By keeping a close eye on their crypto portfolio and the broader market, they can make informed decisions, such as triggering capital losses at beneficial times.
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