As crypto assets become more widely used, we're seeing some common mistakes made in tax returns. While these errors are often unintentional, they can result in incorrect lodgments, requiring amendments and potentially leading to compliance action.
To help you advise your clients and avoid errors in their tax returns, we’ve compiled a list of the top issues we see:
Incomplete transaction records
Many taxpayers rely on exchanges to keep their records, which isn't enough. Let your clients know they're required to keep their own detailed records for each crypto event. This includes every buy, sell, swap, transfer, staking reward and airdrop.
Not backing up transaction data
Crypto exchanges can close and access to accounts or wallets can be lost. Encourage taxpayers to regularly export and back up their transaction histories, so their records remain available to them if they lose access to the originals.
Forgetting to record AUD value
All crypto transactions must be recorded in Australian dollars (AUD) based on their market value at the time of the transaction. This applies even when no AUDs are involved, such as crypto-to-crypto swaps.
Not including staking rewards or airdrops as income
New tokens received through staking rewards or airdrops are generally treated as ordinary income. The market value, in AUD, should be included in your client's tax return, usually under ‘Other income’.
Not reporting disposal events where no cash is received
Tax isn’t limited to situations where crypto is converted into AUDs. A capital gains tax (CGT) disposal can also occur when crypto is:
- swapped for another crypto asset
- used to pay for goods or services
- reinvested into other tokens
These events must be reported in your client's tax return – even if no cash is received.
Treating investment crypto as a personal use asset
Crypto held for investment purposes doesn't qualify as a personal use asset and is not exempt from CGT, even if it's occasionally used to make purchases.
Lost crypto and scams
If your client's crypto asset is lost or stolen, they can claim a capital loss if they can provide evidence of ownership. Be aware that scammers target individuals using crypto trading. Read and share with your clients our Top cyber security tips for individuals to help them keep personal information safe from cyber criminals.