If your crypto asset is lost or stolen, you can claim a capital loss if you can provide evidence of ownership.
You need to work out whether:
- the crypto asset is lost
- you have lost evidence of your ownership
- you have lost access to the crypto asset.
Generally, where you can recover an item it is not lost. For example, you can recover crypto assets by extracting data from a hard drive. However, you can't recover a lost private key.
If you can't replace the item, then you can claim a capital loss, which you can use to reduce any capital gains.
If you lose your private key, you lose access to your crypto assets. To claim a capital loss, you will need to be able to provide the following evidence to show your ownership:
- the date you acquired the private key
- the date you lost the private key
- the digital wallet address for the private key
- the cost to acquire the crypto assets in the digital wallet
- the value of the crypto assets in the digital wallet at the time the private key was lost
- that the digital wallet was in your control (for example, you can link transactions to your identity)
- that the hardware that stores the digital wallet is in your possession
- the transactions from a digital currency exchange where you have a verified account or is linked to your identity.
If a crypto asset exchange or platform goes into administration, this may result in a financial loss for you as a crypto asset investor.
If you experience financial loss resulting from administration, this may give rise to a capital loss. No capital loss will arise, and you will not be able to calculate the amount of any capital loss, before the administration is finalised.
You can use a capital loss to reduce a capital gain, but not to offset against other income.Evidence you'll need in order to claim a capital loss if your crypto asset is lost or stolen.