KPMG today launched a tool to help traders of cryptocurrencies better understand their tax liabilities.
The tool – Crypto Tax Estimator – has been made available exclusively to Australian cryptocurrency exchange Independent Reserve via an API.
On the exchange’s user interface, traders can click for an estimate of their potential tax exposure in real-time, based on their buy/sell transactions on the exchange.
The tool – conceived during a KPMG hackathon event – covers all cryptocurrencies exchanged on Independent Reserve, including Bitcoin, Bitcoin Cash, Ethereum, Litecoin and XRP.
“It is estimated that hundreds of thousands of Australian companies and individuals are trading crypto assets. But in this complex and fast-emerging area, there are few sources of guidance that can help people easily understand the potential tax implications of trading, such as capital gains tax,” said Laszlo Peter, KPMG Australia’s head of blockchain services.
“The possibility of being non-compliant is a major source of legal risk, and we want to provide an easy-to-use tool that may assist participants in the newly emerging token-based economy to understand their tax obligations,” he added.
Independent Reserve in April became the first exchange of its kind in Australia to be regulated by Australian Transaction Reports and Analysis Centre (AUSTRAC).
“We are firmly committed to making the crypto market more attractive for local retail and institutional investors. This tax tool is a piece of critical infrastructure that will help our users understand and help manage their risk,” said Independent Reserve CEO Adrian Przelozny.
“While there are other websites and tools available, this is the first bespoke API to plug directly into a crypto exchange that is backed by a global professional services firm,” Przelozny added.
In last year’s budget the federal government removed the ‘double taxation’ burden on digital currencies.
Bitcoin and other crypto-currencies had been treated as more like a commodity than a currency for GST purposes, with transactions using the cryptocurrency akin to barter under Australian tax law.
A parliamentary inquiry in 2016 recommended that the government tackle the double taxation issue.
“Cryptocurrency markets are growing at a rapid rate across the world, and it is important both for the crypto traders and governments that taxation rules and tools evolve to keep up with this fast-emerging area,” Peter said.