• There is little tax guidance for individuals and companies involved in digital asset trading
• Australia is making an effort to help holders calculate their tax obligations
• Most countries are not so helpful

KPMG Australia and the country’s leading cryptocurrency exchange Independent Reserve have unveiled a new tool that will help cryptocurrency traders better understand their tax liabilities. The tool is only available for Independent Reserve customers.

Click of a button

According to the announcement, the tool, dubbed “Crypto Tax Estimator” was conceived during a KPMG hackathon, is a digital tool that will directly plug itself into Independent Reserve’s user interface and will allow traders to estimate their tax obligations on their portfolio at the click of a button.

The technology that was used to develop the tool is based on KPMG’s expertise in taxation, tax technologies, risk and compliance in collaboration with blockchain experts. KPMG Australia’s head of blockchain services Laszlo Peter said:

“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.”

The tool is only available on Australia’s Independent Reserve cryptocurrency exchange via an API that has the potential of expanding to a wider range of platforms in the future even though nothing of the sort has been mentioned. The tool has been designed to take into consideration a user’s holdings and transaction history to estimate the amount of tax the users may be liable for and covers all the cryptocurrencies available on IR’s exchange and includes Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and XRP.

As the name suggests, the “Crypto Tax Estimator” only gives an estimated figure and users will have to double check the figure to ensure that they are paying the correct amount. Laszlo added:

“The possibility of being non-compliant is a major source of legal risk; 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.”

Most countries are not so helpful

Australia is among a few countries that are trying to make it easier for cryptocurrency users to understand their tax obligations. Independent Reserve cryptocurrency Exchange became the country’s first exchange to become regulated by Australian Transaction Reports and Analysis Centre (AUSTRAC). Australia includes cryptocurrencies in its capital gains tax rules and crypto holders have a legal obligation to ensure they remit the correct amount of tax. Independent Reserve CEO Adrian Przelozny said:

“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.”