How to calculate which coins are sold for tax purposes

When working out gains or losses on trades, you have to work out which coins you have sold for the calculation. For example, you may buy 1 bitcoin a week for several weeks and when you decide to sell, you have to decide on which one you have sold.

The ATO has not issued specific guidance on this, but has issued guidance on how to deal with this situation for shares.

At https://www.ato.gov.au/General/Capital-gains-tax/Shares,-units-and-similar-investments/Identifying-when-shares-or-units-are-acquired/, it writes that ‘if you have the relevant records from your CHESS holding statement or your issuer sponsored statement you’ll be able to nominate which shares you have sold. Alternatively, you can use a first-in first out basis’. See below.

Of course, crypto is not registered with CHESS and you don’t receive an issuer sponsored statement, so the question is, can you nominate which particular coins you have sold. At this stage it is not clear on what the ATO require. To be conservative, the first in first out method can definitely be used. You may consider it reasonable to use another method (eg. last in first out), however once you start with this method, you would have to maintain it for the entirety of your trading as you will have nominated which coins have been sold and after doing this you can’t chop and change. You would also have to demonstrate to the ATO that you had consistently used this method over time.

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