Crypto.com Tax: A Free Crypto Tax Calculator to Manage Your Crypto Tax Reporting

Crypto.com unveiled its very own crypto tax platform, Crypto.com Tax, in March 2021. The platform initially launched in Canada and then expanded to the United States, with plans to further expand into other markets in the near future.

Crypto.com Tax aims to simplify the process of filing complex crypto taxes with its user-friendly interface and country-specific tax calculation formulas. This free service allows users to easily generate reliable and well-organized crypto tax reports, complete with transaction history and information on capital gains and losses. To ensure compliance with existing guidance and laws in Canada for filing crypto taxes, Crypto.com partnered with competent tax advisors to develop the calculation logic.

Users have the option to upload a CSV file or use API synchronization with approved exchanges and wallets, such as the Crypto.com App, to import their crypto transaction records. Within minutes, Crypto.com Tax can provide users with an estimate of taxable gains or losses related to their crypto transactions, which can then be downloaded for tax reporting.

For tax purposes in Canada, cryptocurrency is classified as a commodity. Depending on the individual’s situation and purpose, income from crypto transactions can be considered either capital gains or losses, or business income. When users sell bitcoin, they are required to report the sale on their Canadian personal income tax return. The Canada Revenue Agency (CRA) defines cryptocurrency disposition as selling or gifting cryptocurrency, trading or exchanging cryptocurrency, converting cryptocurrency to government-issued currency, or using cryptocurrency to purchase goods or services.

In the United States, cryptocurrency is treated as property for tax purposes. The taxable events of crypto transactions are categorized as either capital gains or losses, or ordinary income, depending on the type of transactions conducted by the users.

Crypto.com Tax offers several services to its users. It features seamless integration with popular exchanges and wallets, ensuring a smooth and efficient experience. Additionally, it is the first crypto tax product in the market to offer completely free services to anyone who needs to file their crypto taxes. Regardless of the number of transactions conducted in previous years, Crypto.com Tax will provide estimates at no cost. The user interface is designed to be simple and intuitive, providing the best possible user experience when dealing with tax-related issues. Users have the opportunity to review all the results before the final reports are generated.

To accurately report taxes, it is crucial to have complete information about cryptocurrency transactions on exchange and wallet accounts, starting from the first crypto purchase. Even if users are only filing their tax returns for a specific year, they need to submit the complete transaction history to ensure the cost basis is reflected accurately.

Users can export their Crypto.com Wallet App transaction log to a CSV file and then upload it to Crypto.com Tax. For tax reporting of transactions on other exchanges or wallets, users can visit the website and follow the instructions to connect API or upload a CSV file.

Determining if cryptocurrency is subject to taxation depends on the individual’s circumstances. If cryptocurrency trading is considered a hobby, taxable profits are calculated by subtracting the proceeds from the modified cost base of the crypto, multiplied by 50%. Any proceeds from the sale are treated as capital gains and taxed accordingly. On the other hand, if crypto transactions are considered part of a business rather than a hobby, the income from disposition is classified as income or loss. However, Crypto.com Tax currently does not support business purpose transactions.

When purchasing cryptocurrency, it is not considered a taxable event. However, it is important to keep track of the purchase price, including any related fees, as it becomes the cost basis of the cryptocurrency and is used to calculate capital gains or losses for future taxable events, such as dispositions.

Selling cryptocurrency for fiat currency is a taxable event. To calculate capital gains or losses, users can subtract the cost basis and related costs from the proceeds.

In some cases, if an individual owns more than CAD 100,000 in “specified foreign property” in a given year, the CRA requires them to file the Foreign Income Verification Statement (T1135). Certain cryptocurrencies can be classified as “international property” depending on their location, which may not always align with the country defined by the fiat currency.

For more information and to fulfill your crypto tax reporting obligation, please visit Crypto.com Tax, a free tool provided by Crypto.com.