Speaking in an upcoming SMSF Adviser podcast, CryptoTax Calculator product manager Matt Crofts said the collapse of FTX in early November has had a substantial impact in Australia with around 30,000 Australians estimated to be impacted.
“I don’t know how many of those are SMSFs but its quite a large number and when you look across the crypto industry there’s close to 1.2 million with some sort of tax impact,” said Mr Crofts.
Aside from financial losses, Mr Crofts said one of the other key issues that both individuals and record keeping cryptocurrency record keeping companies such as Crypto Tax Calculator are facing is that you can no longer download any data or transactions or interact with the FTX exchange.
“We’re currently in the middle of the financial year, so you may not have downloaded those transactions yet and you want to record those, or have accurate records of those up until 30th of June 2023 but the site’s now blocked,” he said.
Mr Crofts said this is one of the risks that SMSF investors need to be careful of.
“You need to keep accurate records and trying to recreate those records if you’ve done a lot of transaction volume could certainly be an issue,” he said.
“You could potentially go back through your emails if you’ve been notified of any trades through emails but its certainly going to be a nightmare for anyone caught up in it.”
Where SMSFs are choosing exchanges Mr Crofts said they should look for exchanges with robust APIs in order to be able access up to date records easily.
“If the exchange doesn’t have that then you’ll need to download the CSV file fairly regularly,” he advised.
For funds or investors that have lost assets or who currently have crypto assets frozen, Mr Crofts said the ATO has given some limited guidance on their community pages.
“Cryptocurrency is a capital gains tax (CGT) asset and the ATO has said that it looks like a C2 event which effectively means that as long as there’s no chance of reclaiming that asset, that it is really lost, then you can claim it as a capital loss,” he explained.
“So you may be able to write off those losses as a capital loss.”
Mr Crofts said there’s been some discussion on the ATO Community Forums that it would not be considered a G3 event which relates to liquidation of shares and where you generally have to wait for the liquidation notice.
