With recent guidance released by Inland Revenue on how to treat certain types of blockchain income and expenses, we’ve been working hard to integrate these into our platform. Taxoshi now supports reporting for airdrops, hard forks, mining & staking, liquidity providing & other de-fi earnings, as well as stolen & lost cryptoassets, interest & other expenses, and network fees.
All you need to do to use this new feature is download the CSV template from the FAQ How do I use the Income and Expenses upload and fill in any data you wish to add to your reporting calculation.
How the calculation works
The types of income which can be reported are; airdrops, hardforks, mining, staking, defi earning and other generic income.
All income is essentially treated treated the same. There is a taxable event created when you receive the income for the whole value of the income in NZD minus any fees which were incurred. This value is then considered the price of the stock as it enters into the FIFO calculation as inventory to be matched with sell orders or expenses.
For example. if you got airdropped 0.001 BTC which was worth $10 at the time, you would have a taxable income of $10 on that airdrop. If you then later sold the 0.001 bitcoin for $100, you would have a $90 gain there which is taxable as income. It may seem trivial to split it like this and just assume the $100 gain when you finally sell the 0.001 BTC but if you received it and sold it in two different tax years, their would be a taxable event in each year which needs to be reported as income according to the guidance.
The types of expenses which can be reported are; transaction/exchange/pool fees, lost or stolen cryptoassets and other generic expenses.
The fees and other expenses are deducted in NZD at the date and time specified but they are also required to be matched to existing inventory in the FIFO calculation since it is still technically spending inventory you have in stock.
For example, if you originally bought 0.001 BTC for $10 and the value of that 0.001 BTC rises to $100 then you pay an exchange withdrawal fee of 0.001 BTC. You will have paid a $100 fee which is deductible, but you will have also made a $90 gain ($100 – $10), so the total deductible amount will only be $10. In the report output, the fee is displayed as part of the expenses and the $90 gain will appear as part of the FIFO calculation but they would balance out to a $10 expense as described above.
Lost and Stolen Cryptocurrency are the only types which require the an additional column called “PriceDate” to be filled in. This is because the IRD guidance states that stolen or lost cryptocurrency is claimed in the tax year the loss happens, but can only be deducted at the original purchase price and not at the current market value. So you need to enter the original purchase date there and we will go and look up the correct exchange rate for that date and that amount is what is deductible as an expense.
While these income and expenses are a welcome addition to the types of blockchain activity that Taxoshi can support, we of course will continue to streamline this feature into the future.
Currently we can only support income or expenses in our set of cached exchange rates which are listed on the FAQ. We also want to further integrate this feature directly into popular earnings platforms so there is no need to manually fill in the spreadsheet and upload it into the system.
This is just the beginning of our support for blockchain income and expenses and we hope that it helps you to accurately file your cryptoasset taxes this year!