In the last few years, the amount of retail investors trading the share market and/or crypto has exploded. At 3D we have seen this ourselves, with a lot of clients new to this investment space. So, a few things you need to be aware of:
1. The ATO know everything you are doing. They have data matching with all the share market brokers and crypto platforms. They even tell us as tax agents each year, on the individuals ATO pre-fill report, what shares or cryptos have been sold by that individual during the financial year, so they are expecting to see something in the tax return on this front (PS: Same goes for rental property sales by the way, they know when you sell a property, and they expect to see something in your tax return about it).
2. To address this requirement, you need to keep good records of your buys and sells. Many share market brokers e.g. Commsec have good year end reports, however if you bought 2 years ago and sell this year the brokerage report will not include the previous buy prices, nor will they calculate the gain for you, so it’s best to keep some sort of spreadsheet to keep track of everything. In terms of crypto, many of the platforms have average reports so it’s even more important here to keep your own records.
3. The better you keep your records, the more you will save on accounting/tax return costs. We have had quite a few instances where we have spent substantial time, calculating capital gains for clients who have made very small gains and the cost of doing the tax return turns out greater than the trading gains (or worse, costs to calculate a trading a loss), so to keep your costs in check keep good records.
4. As with all capital gains – you pay your normal marginal tax rate on 100% of the capital gain if you held the investment for less than 12 months, and you pay tax at your marginal tax rate on 50% of the gain if you held the investment longer than 12 months. If you make a capital loss these are offset against current year gains and/or carried forward to offset capital gains in the future.
For any related questions feel free to contact us.