The number of individuals investing in cryptocurrencies is rising exponentially each day. This is because you can become a millionaire or perhaps a billionaire in just a night. History is proof.
However, when it comes to paying taxes for crypto exchange transactions, it might be a difficult task. If you are a cryptocurrency investor, you will likely make many trades yearly. Not everyone can keep track of these transactions and estimate net profit and loss.
Therefore, you can use crypto tax software, which automatically synchronises between cryptocurrency exchanges and wallets, calculates your capital gains and losses, and generates final tax reports that can be used to file your taxes. Below is a curated list of Australia’s best 10 crypto tax software in 2023.
How do crypto taxes work in Australia?
Depending on the conditions of the transaction, cryptocurrencies are liable to capital gain tax (CGT) and ordinary income tax in Australia.
CGT is the tax paid on the difference between the Australian Dollar (AUD) value of the sold asset at the time of disposal and its AUD value at the time of acquisition.
If a person has owned an asset for more than 12 months before selling it, a CGT deduction can be applied:
- 50% for resident people (including partners in partnerships)
- 33,33% for conforming super funds and qualified life insurance companies
- 50% discount is removed or reduced on capital gains after May 8, 2012, for foreign resident individuals.
Total taxable capital gain = (capital gains – capital losses) * capital gains discount = (capital proceeds – (cost basis + fees)) * capital gains discount
Note: capital losses are removed from capital gains before CGT reductions are applied.
CGT deductions are not applicable if the assets have been held for less than one year.
Non-CGT occurrences, such as crypto DeFi revenue, are considered regular income. Your total taxable income comprises your net capital gains and your income. The entire taxable income will be taxed at these rates.
Since July 1, 2017, cryptocurrencies have been free from the goods and services tax (GST).
Read more: Australia Crypto Tax Guide 2023
What Is Crypto Tax Software?
Crypto tax software is any computer program that makes it easier for you to deal with the taxes linked with your bitcoin market activity. In many instances, the programme will also contain a comprehensive crypto portfolio tracker, allowing you to examine your crypto assets across several exchanges and wallets in a single interface.
Having the most effective crypto tax software facilitates the calculation and submission of tax returns. After calculating your earnings or losses in bitcoin, the programme can fill in the necessary information automatically.
This minimises the time required to complete a tax return. In addition, the finest crypto tax software can reduce the complexity of preparing this tax return form.
The mechanics of utilising the best crypto tax software are identical to tax preparation software for conventional assets. You can register for access to the software. Most systems allow you to link crypto exchanges and wallets to get transaction history.
After selecting the best crypto tax software for your requirements, you enter the necessary information [such as your legal name, email address, dependents, and AGI (adjusted gross income)] for the prior year. Forms 1099-G and business receipts may be requested as additional information.
Features to Look For in Crypto Tax Software
When you enter the crypto realm, you must have a reliable method for calculating your crypto taxes. As previously said, any event you perform in crypto is still taxable, and you should have all your paperwork in place. Your activity is monitored so that you may file proper tax returns and prevent overpayment or fines.
Available Integrations
The best crypto tax software should be able to interface with all of the most common exchanges and wallets to enable automated data entry. If you are a professional trader, manually monitoring your transactions might be laborious.
You must keep track of pricing, the number of coins or tokens you exchanged, and the length of time you had them in your wallet.
Additionally, it is essential that the programme you purchase can be used in your nation, as taxes vary based on location. The software you pick should adhere to the tax requirements of your country.
Even if you are not a skilled trader and have fewer transactions per year, these technologies may save you countless hours of manual data entry.
Accuracy of Paperwork
Once these data aggregators have all the essential information, they can determine the crypto taxes you owe. To accomplish this without difficulty, you should seek the most accurate crypto tax calculator accessible.
Most tax preparation software should also provide you with ready-to-file, pre-filled forms. It should assist you with more than the notorious IRS Form 8949.
You should be able to rely on it for foreign taxes, your audit trail, and even for reporting bitcoin profits and losses on your taxes.
Available Features
The best cryptocurrency tax software also features outstanding transaction history tracking dashboards. It should include tax-loss harvesting and other features to ease your tax administration.
Some software solutions will identify transactions between your wallets and exempt you from taxation. Others will eliminate duplicate transactions from your forms automatically.
Having access to all of these tools also saves time for tax experts. Some of these solutions provide tax experts with tax management software for cryptocurrency profits.
Some systems include the option to engage a team of tax experts, which might be advantageous for experienced traders who lack time to double-check software data.
Other alternatives include non-crypto tax management, which is ideal for people who wish to handle all their taxes in one location. However, choosing a traditional, specialised tax software solution may be wiser if you require this.
Reputation and Security
Reputation and security are crucial features of any software that handles taxes (particularly in the crypto realm). You can rest assured of using the most dependable and secure crypto tax software.
You don’t want to have to pay penalties or, even worse, be accused of tax evasion if the IRS compares your report to those produced by cryptocurrency exchanges.
Before committing to a specific piece of software, you should investigate other users’ impressions.
Checking crypto tax software reviews is a great concept that might help you assess whether or not the programme is appropriate.
Pricing and Free Trials
The easiest method to evaluate crypto tax software is through a free trial that provides hands-on experience. Numerous providers offer try-before-you-buy programs or inexpensive basic plans.
To select the suitable software, you can determine if a piece of software will scale adequately when your transaction volume increases in the following year.
With some systems, several tiers grant access to distinct functionalities. However, not all features justify the additional cost. Remember that obtaining correct tax returns on time is essential here, and if you don’t need more features, don’t pay for them.
Top 10 Crypto Tax Return Software for Australia
Koinly
Koinly is an online platform providing crypto tax services for institutional and ordinary clients. It controls your portfolio of cryptocurrency wallets and tracks all transactions. By creating regulatory tax reports for each transaction, it allows you to make tax payments on time and in the exact amount. When you are trading, mining, or lending, Koinly will follow all activity on your wallet. It generates detailed records for each occurrence and determines the precise tax amount. Therefore, you no longer need to pay unnecessary tax costs.
Crypto.com Tax
Crypto.com Tax is a free online software for generating crypto tax returns. It integrates seamlessly with popular Australian exchanges and wallets to import your crypto transactions for buying, selling, trading, gifting, airdrops, and more. The UI is well-designed and straightforward for novices, but this crypto tax software may sometimes be tiresome and challenging.
CoinTracker
CoinTracker is an excellent portfolio tracker for cryptocurrencies. It is one of the premium services that costs a considerable amount of money annually. It is among the most powerful crypto portfolio trackers that simultaneously analyse all your trades and produces pinpoint data. You can access your profit-and-loss information, tax gains, and tax returns through its server. CoinTracker now boasts more than 300,000 active users from all corners of the globe. With a platform that expands daily, it is not surprising that they have openings for new hires.
Taxbit
Australia’s foremost blockchain CPAs and crypto tax attorneys have created the Taxbit cryptocurrency tax software. This industry-leading software enables the connection of over 4200 cryptocurrencies worldwide. With a Taxbit account, you can effortlessly trade cryptocurrencies, conduct transactions using U.S. tax codes, manage and monitor your wallet portfolio, and more. The most significant benefit is having access to portfolio traffic data, fund audit trail, capital loss deduction, and IRS 8949 tax forms with simply Taxbit.
CryptoTrader
CryptoTrader is an automated cryptocurrency trading robot. This platform is 100% trustworthy for trade routes and tax payments. Previously, users manually managed the massive data stream for tax payments in the cryptocurrency market. However, they now have CryptoTrader to perform their assigned tasks. This automated organisation handles all of your crypto wallet trades and tax payments. Once you link the app, you are no longer responsible for making tax payments. In addition, the platform provides support for Cryptocurrency income reports, short-term and long-term sales reports, IRS Form 8949, audit trail reports, end-of-year positions reports, turbo tax direct import, and TaxAct direct import. Join their millions of satisfied members and never again worry about taxes.
TokenTax
Alex Miles established TokenTax, a crypto tax management firm, in 2017. This software imports data straight from cryptocurrency wallet retailers. It won the 2017 Product Hunt Global Hackathon for its exceptional data analysis capabilities. TokenTax is a cryptocurrency tax calculator that integrates with every cryptocurrency exchange. There are no restrictions on the data source, and data may be imported from any location. It monitors your wallet’s transactions, including capital gains, losses, and exchanges. The gathered data ensures tax responsibility for all virtual currency transactions. Therefore, your funds will flow properly. Have TokenTax as your tax partner, and your tax issues will be resolved permanently.
BearTax
BearTax is a low-cost tax administration software with a world-class reputation for quality services. This platform serves the United States, Canada, Australia, and India. The software can automatically get your tax information whenever you make a deal, deducting the correct amount of money from your wallet for taxes. The notable feature is that you are never charged per trade. The premium subscription costs around $200 annually and includes unlimited commission-free transactions.
ZenLedger
The most efficient and user-friendly tax software for bitcoin investors and accountants is Zenledger. It allows bitcoin investors to manage their portfolios, create profit-loss statements, submit taxes, and dodge IRS examinations. They provide automated solutions to help investors and CPAs reduce the manual grunt work of crypto tax accounting. It is compatible with the vast majority of crypto and fiat currencies. You can choose from two sorts of services, one for producing tax tokens for investors and the other for automatically paying investors’ taxes.
Accointing
Accointing is a tax and portfolio management software for cryptocurrencies. Accointing enables crypto traders and fans to import, track, and manage their transactions and create a tax report based on the user’s jurisdiction during tax season. This software’s minimalist yet exhaustive UI displays all relevant information regarding cryptocurrency wallet management. Simultaneously, the dashboard allows for a tap-based deep dive into pricing and market capitalisations. Accointing operates by gathering data from exchanges that are directly connected via APIs, wallets that are added using public addresses, and transaction data may be uploaded manually for particularly unusual currencies. Currently, they support just five major nations and have minimal influence over the others.
BitcoinTax
BitcoinTax is a crypto tax software that provides comprehensive tax data on your transactions. Whether you purchase or sell from one of their affiliated wallets, mine or receive coins, or make investments, BitcoinTax will assess your tax position and quickly tell you. It allows you to evaluate diverse cost-basis approaches, including FIFO, LIFO, and average costing. The services include income reports with mined values, contribution reports with cost basis information for donations and gratuities, capital gains tax reports and tax forms, etc.
BitcoinTax features various price structures dependent on the type of wallet used, which is its most outstanding feature. There are wallets for regular investors, market traders, trade businesses, auto-tax features, and more. BitcoinTax is one of the most prominent businesses to manage your bitcoin taxes.
Is Crypto Tax Software Worth Using?
Whether crypto tax software is worthwhile depends on selecting the appropriate software for your needs. If you are new to the world of digital currencies and do few transactions, you may choose a free plan from Blockpit or Koinly.
However, ZenLedger or TokenTax may be regular trades’ finest crypto tax software. These systems may enable you to assess pricing plan expenses through tax-loss harvesting and optimisation.
Any crypto tax software that synchronises your transaction data effortlessly or generates profit-and-loss reports might be the ideal software investment. Still, it’s advisable to examine the advantages and downsides carefully. Consider characteristics that meet your specific business requirements.
The Bottom Line
Increased cryptocurrency popularity has attracted the curiosity of several traders and investors owing to the possibility of enormous rewards. However, trade in this digital money results in tax obligations.
It is essential to accurately calculate capital gains and losses to pay the correct amount of tax. Using the most appropriate crypto tax software for your case will guarantee that your taxes are accurate and stored in an easily accessible location.
