We're here with Danny and Adam from Koinly.
We talkin' How to Make Your Crypto Taxes Super Simple.
Danny, welcome. The head of tax, the man himself.
Thanks very much.
Thanks for having.
What's going on? Adam The Koinly man.
Pleasure to be here. Like your hat my bro.
Thanks man, got the rocket on it.
So how much does the ATO know about crypto taxes?
Yes, good question.
So the ATO is
you have data matching programs in place with the Australian exchanges.
So those exchanges can report information to the ATO
and reconcile it with what you have reported on your tax return.
So it's likely the ATO will have your information before
you even go and report it on your tax return and also they'll
reconcile what you put in your tax return to that information they've received.
So tracking, trades, staking.
How does that work with COIN?
So essentially with Koinly, you can plug in all your wallets,
exchanges, all your integrations on chain, pull down all your transactions
that you've been making,
all on all these various wallets and integrations into one place.
So aside from just tracking your funds, your profits, your losses, your portfolio,
you can also generate a tax report through that connection via
API onto those exchanges.
You can also upload spreadsheets into Koinly
which have all your transaction history.
But if you use an API connection, you can really get that real time
track of where you're at with your taxes.
Finder's exchange
has just being integrated with us so now people can export their transactions
from the Finder products and get them straight into Koinly.
There's a concept called loss harvesting.
Can you describe and tell us about that Danny?
I think it's quite relevant at the moment.
You know, a lot of people will be sitting on losses in their portfolio.
Loss harvesting is a silver lining.
It's a strategy you can apply when you do your taxes
to actually realize your losses from a capital perspective
and offset them against potential gains that you may make in the future.
Now, there's a there's an important thing with crypto
in terms of capital gains tax
and holding for a period of time and then there's a discount.
Can you sort of walk us through how does that work?
You're an ordinary investor.
Capital gains will generally apply, which means when you make a profit,
you pay tax, income tax on that profit.
And equally, when you make that loss, you can offset losses against future gains.
Now each crypto asset,
so whether it's an NFT, whether it's Bitcoin, whether it's ETH.
Each asset is classed as a CGT asset, and if you hold an asset
for more than 12 months, you're potentially able
to have a 50% discount on that, on that capital gain.
So it can be a really handy way to save on your taxes if you hold for a long time.
If you don't sell, can you still do the 50% discount?
So you actually have to realize the sale so it doesn't really apply to
anything unrealised.
Same with loss
harvesting to carry forward that loss you actually have to realize loss.
So when you realize again,
that's when you consider, well, have I held the asset for more than 12 months?
And whether the 50% discount apply.
How long do those last for?
How long do those gains or those losses last for?
You look at things that on a yearly basis.
So at that point in time, you work out if you've made a sale in the tax
year, have I held the asset for 12 months or more?
And if you do that, then you get put into a long term
gains category, which is where you get the 50% discount.
But you also got to consider it in the context of all your other gains.
So it might not it might not be crypto related, it might be shares,
might be a property and that all gets lumped into your capital gains.
And if you've made a net profit, that's the amount that you pay
tax on or income tax on in that tax return. Why?
Why Australia? Why is Koinly come here?
So we started in like 2018 as a 100% remote
and we looked at what markets naturally took off.
And Australia,
even though its population is smaller compared to other spaces,
it's like our second largest market in the world.
We have hundreds of thousands of people here using our product all the time.
So I spoke to the founders
the early part of the year and they asked me if I'd be interested
in setting up the office here.
33 people on George Street now with customer service marketing.
It's been pretty wild.
There's a lot of changing regulation right now in Australia with this movement.
What do you guys see as important and where do you want to see some changes?
We see tax is just one facet of regulation and we're
seeing regulation apply as a whole, you know, with exchanges,
financial services in the crypto space, having to embrace regulation.
And we know it's coming in the tax space, the ATO's issued guidance in that area.
So there's guidance on how you should pay your taxes.
From an investor's point of view, but also from a trader point of view.
What we're likely to see towards the end of the year is a bit
more guidance by way of the Board of Taxation review
that should cover some more of the complex interactions around how we trade crypto.
I think something that's important to mention
as well is cryptocurrencies doing like a lightning run
to kind of replicate the banking industry, which had 2 to 300 years
to be able to build like these regulations
and now that we have like
modern technology and the blockchain and so many different options here,
the government is still playing catch up and still trying to understand
like what is the impact that this can have?
Think what's really important for the industry now
and as more and more professionals come into it, that we create
sensible regulation that doesn't necessarily stifle innovation,
that blockchain and technology associated with it is trying to create,
but actually have sensible regulation that allows the industry to progress,
that allows people to build and innovate, particularly in bear markets.
You talked a little bit, Danny, about NFTs.
NFTs are pumping right now, everyone's flippin the JPEG, love it.
What is the deal with that?
Is that is that a capital gain or what is that?
There's definitely a misconception out there that if I'm holding NFTs,
it's not taxable.
I don't have to worry about it.
It's online, it's cool.
Nothing to see here, but
nfts are definitely taxable and the ATO have actually come out
and said if you're if you're trading NFTs, their class is crypto
assets like bitcoin, like your coins and tokens that you might hold.
So with NFTs, it's like any other capital asset if you're an investor.
if you've
sold an NFT for a profit, you're likely to be paying capital gains on it.
If you're a trader and you're trading lots or you're just buying
and holding as an investor, is there any tax implications to that?
The first question is
whether you're trading as a business or as an individual investor.
And there are all sorts of factors that can tip you over
from being an individual investor, which is treated
under capital gains, to being a business which trading stock rules apply.
So different tax regimes.
And so there's different factors like volume of transactions, you know,
whether you have a business strategy in place, I think there's different things
to consider in terms of what tips you from an investor to a trader.
But the key thing is that there are different tax rules that apply.
So really working with your accountant on that is going to be important.
Adam, what's coming up for Koinly in Australia?
What's on the roadmap?
We've got some pretty awesome product rollouts happening
and it has been an exciting year for us, especially
with a lot of the advertising campaigns that we've seen going out.
We've just launched like a local customer
service, B2B phonelines so that we're working with accountants
to provide a software for accountants for them to be able to facilitate
helping their customers with tax transactions.
But we've got some pretty cool products in the work that's going to help expand
kind of what we can do.
But we're seeing a lot of people really wanting to do their taxes this year.
It's kind of interesting.
So when, with Finder, we did some advertising recently
and we put out a code which was the, it was a finder 22 code
and it went within like less than a day of like a thousand free reports.
So much so that we did a secondary code and it went again.
So what we decided to do today is to give out another 2000 codes
split between one between another video that we're doing with you and
one for this video, which will be FINDERYT22 and customers
can get free reports.
So it will be 1000 free reports, 30% off after that.
But what we're seeing is every time we release like a code
or a discount like this, it just disappears.
And for everyone else,
if you want to watch more videos like this, do subscribe and do follow us.
It's the daily exchange, guys. Yeah.