How To Record Those EWT Crypto Trades To Stay Tax Compliant HSV GTS Follow Apr 5 · 6 min read

How to record your Energy Web Token trades for Taxation purposes

Since I commenced investing in Cryptocurrency several years ago I have seen numerous people declaring their crypto trades incorrectly with some not declaring them at all which is just asking for trouble in the future with the increasing KYC requirements by leading global exchanges.

The information in this article relates to Australia and how Cryptocurrency is treated with regards to taxation. In Australia the Australian Taxation Office treats Cryptocurrency as Capital Gains Tax, one could assume that for other regions if your country also treats Cryptocurrency as Capital Gains Tax you could also follow these principles to calculate if you have had a CGT profit or loss, its then up to your countries legislation as to how your profit or loss is then treated.

Please note that I am not a licensed accountant or financial advisor

The following information is from what I have learned from investing in cryptocurrency for a few years and managing several Self Managed Super Funds that all had to be audited by a SMSF Tax Auditor and then be processed by the Australian Taxation Office which has been done several times without any issues.

Can I receive the 50% reduction in CGT if I have made a profit for the financial year ?

It should be noted that with regards to Capital Gains Tax if you hold the asset for longer than 12 months you will receive a 50% reduction in CGT owed, assuming you have made a profit.

This means if you were to buy 20,000 Energy Web Tokens and not sell them for 12 months or longer you would get the 50% CGT reduction at your marginal tax rate assuming ofcourse you sold them at a profit.

What happens if I have a Capital Gains Loss in a financial year ?

The Australian Taxation Office will not reward anyone with a refund if they have a CGT loss in a financial year, instead that loss is carried forward to a future financial year where you have had a CGT profit.

Lets say in 2018/2019 financial year you had a CGT loss of $25,000 but then in the 2019/2020 financial year you had a CGT profit of $50,000 you will only pay CGT at your marginal tax rate on $25,000.

A very important point that people need to know is that in each financial year where you have traded cryptocurrency you are required to submit details in your annual tax return whether you have had a CGT loss or profit, eg you do not just wait until you have had a CGT profit and then deduct the previous years CGT loss, the loss needs to be recorded in the year it occurred.

that people need to know is that in each financial year where you have traded cryptocurrency you are required to submit details in your annual tax return whether you have had a CGT loss or profit, eg you do not just wait until you have had a CGT profit and then deduct the previous years CGT loss, the loss needs to be recorded in the year it occurred. If you do your tax return yourself there is obviously a section with regards to CGT where you input whether you have had a profit or loss.

Is it difficult to record my cryptocurrency trades ?

Once you know the correct procedure on how to record your crypto trades it is fairly straight forward.

What makes things a bit more complicated is having to record also crypto to crypto trades and not just fiat to crypto or crypto to fiat trades, eg say you buy some Bitcoin to buy EWT Tokens, not only do you need to record the EWT trades but also what you paid or acquired the Bitcoin for and what you sold or disposed it for.

Unfortunately this can be very time consuming if one is performing trades regularly, also I would never rely on a software program to calculate figures as most I know of still require you to enter some information and assume you have traded a particular way in some circumstances.

However, many people do use these software programs without issue and the previous statement is just my own opinion.

The procedure for recording your cryptocurrency trades

The following information is going to assume I have bought some Bitcoin from Coinspot in Australia and then used that Bitcoin to purchase the Energy Web Tokens.

Note that you would also need to be keeping records of your Bitcoin trades (as mentioned above in Australia one needs to record all crypto to crypto trades as well) but they will not be recorded in this example.

The figures will just be made up for the purposed of this article but actually occurred with regards to other trades.

Below is the procedure I use

Print out your trading history when purchased the Energy Web Tokens (note for Liquid exchange all you are shown when click on executions on the trading page is the price and amount of tokens paid/sold, even if you click on funds/transactions history you are not shown any further trading history that you can use), a normal exchange would atleast calculate each trade for you so total amount of BTC can be seen for each individual trade plus some then giving you the option to download directly to an excel spreedsheet, as a result one is required to perform a calculation manually by multiplying the price you paid or sold token for by the amount you bought or sold, refer to spreedsheet.

Print out your trading history of when you sold any Energy Web Tokens, ignore the two buy orders in the photo below.

One then needs to create three spreedsheets:

1, A spreedsheet where you copy and paste all your EWT buys and sells and convert into your local currency for the date acquired or sold.

2, A spreedsheet which will be used to calculate if you have had a capital gain loss or profit for the particular token (in this case EWT). This spreedsheet involves adding four pieces of information from the above spreedsheet (total EWT bought, total AUD spent, total EWT sold and total AUD received).

3, If you have traded more than one token (remember in Australia you also need to record crypto to crypto trades) you then add up all the tokens that have given you a CGT profit and then deduct the token amounts that have given you a CGT loss from this figure. I will add some made up figures for BTC, ETH, XRP, OCEAN and QNT to demonstrate.

AUD conversion figures you also need to download and keep which have used in the above example.

Conclusion