The complete crypto tax guide to Phemex

Written by

Nick Christie

|

Co-Founder

last updated on

1
Dec
2023

What is Phemex

Phemex is a reliable, global trading platform for cryptocurrencies and derivatives. The platform is dedicated to providing equitable financial access using advanced technology to empower individual investors.

  • High security: With cold wallet storage that requires level 2 human review for transfers, Phemex ensures the highest level of wallet security for Australian investors.
  • Professional expertise: Phemex is founded by ex-Morgan Stanley executives, providing expert knowledge and effective strategy to navigate the volatile world of cryptocurrency investing.
  • Efficient trading: Phemex's system is designed to process a whopping 300,000 transactions per second, providing a swift crypto investing experience with excellent response times.

Do you have to pay tax on crypto?

Since the ATO introduced crypto tax guidelines back in 2014, we know that crypto must be declared in your tax return.

As an Australian taxpayer, you are legally required to report your worldwide income, including crypto earnings and losses on Phemex.

ATO tax treatment of crypto

There are two types of assessable income that your Phemex investments are taxed on in Australia:

Capital Gains Tax (CGT): You’ll end up with capital gains whenever you buy a crypto asset, and later sell it for a higher price. Capital gains and losses can result from trades, disposals, gifts and many other transaction types.

Example: You purchase Bitcoin on Phemex and later sell it, resulting in a Capital Gain that is subject to CGT.

Ordinary Income: You can easily end up earning income from a range of sources such as commissions, staking, referrals and many more. These sources of income must be declared on your income tax return.

Example: You receive an airdrop on Phemex, causing Ordinary Income which must be declared.

Dealing with crypto taxes can be confusing. Remember to keep the right documents and learn how to do your taxes properly. This way, you won't make errors that will trigger an audit from the ATO.

Penalties for not declaring tax

The ATO has an annual $3.6 billion budget for administering Australia's tax system. Its Black Economy Taskforce plays a key role in fighting tax evasion, ensuring everyone pays their fair share. Australians who don't declare their taxes face severe consequences, including penalties, interest, fines, and the risk of criminal prosecution for tax evasion.

Australians who use Phemex and avoid declaring their profits are facing significant risk. Thankfully, Australia boasts one of the highest tax compliance rates, with over 93.7% of individuals fully meeting their tax responsibilities, indicating that only very few are actively trying to cheat the system.

Submitting your tax returns late can create issues, damaging your good standing with the ATO and Australian Government, and leading to a higher chance of an audit or review. It may also hinder your ability to get a home loan for a property.

Does Phemex report transactions to the ATO?

The ATO has over 100 information sharing agreements, which cover almost every country and tax jurisdiction globally, to ensure no one avoids their tax.

In short, the ATO is going to find out about your transaction history on Phemex. Even if they don't find out about it this year, they'll find out in the very near future.

The last thing you want is the ATO coming after you for years of tax avoidance. That means it's important that you do calculate and declare your crypto gains, otherwise it’s only a matter of time before the ATO comes after you.

ATO record keeping requirements

To complete your crypto taxes each year, there’s some important records that you need to keep. Having these records will help you to calculate and declare your crypto tax, and are also your evidence if you need to prove how your crypto tax was calculated.

The ATO record keeping requirements for crypto require you to keep the following:

  • receipts when you buy, transfer or dispose of crypto assets
  • a record of the date of each transaction
  • a record of what the transaction is for and who the other party is (this can just be their crypto asset address)
  • exchange records
  • a record of the value of the crypto asset in Australian dollars at the time of each transaction
  • records of agent, accountant and legal costs
  • digital wallet records and keys
  • a record of software costs that relate to managing your tax affairs

The ATO has also advised that records should be kept for at least 5 years.

Phemex Account Statements

Phemex has made a number of account statements available to ensure you can meet your record keeping requirements. You can follow the account statement export instructions from Phemex to download a copy of the files.

You can download the following account statements from Phemex.

Your crypto tax software may also be used to satisfy the ATO record keeping requirements. Syla has been designed to satisfy Section 121.20 and Section 121.25 of the Income Tax Assessment Act 1997, that deals with ATO record keeping requirements.

Syla is an industry-leading crypto tax software that can be used for Phemex. Syla can be used to record your transactions by File Import. Syla keeps a record of the original source data, in the exact format it appeared on your account in Phemex, ensuring you meet your record keeping obligations.

Having your records is just step one, because now you’ll need to calculate the tax outcomes for each and every transaction. You’ll need to make sure you do it accurately, or you’ll be at increased risk from the ATO.

How is crypto taxed on Phemex?

We all know that crypto is taxed, but the exact tax treatment can vary. Understanding exactly how your different crypto transactions are taxed can not only help you meet your tax obligations, but it can actually help you to make smarter investment decisions.

Important: In the following sections we are considering the tax treatment of an individual investor. If you’re a trader or a different entity such as a Company, Trust or SMSF, your tax treatment may vary.

Buy and sell crypto

Capital Gains

When you buy crypto on Phemex, it is a purchase of a CGT asset for tax purposes. Whenever you purchase a CGT asset you must record and track the cost base.

When you later sell crypto, you’ll need to record the proceeds from the sale. By subtracting the original cost base from the proceeds, you'll be able to calculate and declare the resulting capital gain or loss.

The basic idea works like this:

  • If your crypto went up: declare the increase in value as a capital gain.
  • If your crypto went down: report the decrease in value as a capital loss.
  • If you held crypto over 12 months: it’s eligible for the 50% CGT discount.

The calculations for CGT can get very complicated, which is why our tax team wrote an in-depth guide on how to calculate CGT on crypto.

Buy crypto with debit or credit card

Phemex offers a convenient way to buy crypto using a debit or credit card. In Australia, purchasing crypto by card is not an immediate taxable event by itself. However, when you do later sell the crypto, it will result in a capital gain or loss.

If you purchased crypto using a debit or credit card than you should also consider the transaction fees that you paid on the purchase, as these can be quite high. You'll be pleased to know that the transaction fees can actually help reduce your tax when they are declared correctly.

Transaction fees related to the purchase of a crypto investment can be added to the cost base, which reduces the resulting capital gain when you later sell. In practice, claiming the transaction fees will reduce your capital gain. Make sure you declare all the transaction fees related to your crypto investments for the best tax outcomes.

Phemex Earn

Ordinary Income

The earn program on Phemex allows you to generate interest on your crypto holdings. By transferring eligible crypto into the earn program, you will generate regular interest payments that add to your crypto holdings. You can think of it like earning interest in a bank account, except for your crypto.

Just like interest in your bank account, you must also calculate and declare the crypto that you earned in the earn program. For each crypto payout, you'll need to calculate the market value in AUD and declare it as ordinary income in your tax return. You’ll also need to track the cost base of the CGT asset, so you can declare the capital gain or loss when you sell it in the future.

Tracking daily crypto earn payouts can be a chore, and it’s easy to end up with hundreds, if not thousands of transactions, all of which are taxable. When selecting crypto tax software, make sure you check the cost-effectiveness based on the number of transactions you have, and pick one that can handle thousands for an affordable price.

Learn & Earn

Ordinary Income

The Learn & Earn program on Phemex is an innovate way for Australian crypto investors to improve their understanding of crypto. By completing educational tasks, such as watching videos or reading articles about blockchain, you can earn small amounts of crypto rewards.

In Australia, the ATO views the earnings from crypto learn and earn programs as income, that are subject to income tax. This means that whatever crypto you earn from these programs must be valued in Australian dollars at the time you receive it and declared as income in your tax return.

For Australian crypto investors diving into learn and earn programs, keeping thorough records is crucial. Document the date you receive each crypto reward, its value in AUD at that time, and any related details. This information is key for accurately reporting your income to the ATO. Be aware that even small earnings can add up, affecting your tax obligations.

Derivatives

Ordinary Income

Crypto derivatives are financial instruments whose value is derived from the price of an underlying cryptocurrency. They are distinct from actual cryptocurrencies and are designed to allow investors to speculate on price movements without owning the actual asset.

You can trade the following types of derivatives on Phemex:

  • Perpetual Futures

In Australia, the tax treatment of crypto derivatives is very different to the tax treatment of actual crypto assets.

When you trade derivative contracts for profit, the resulting gains or losses are generally treated as ordinary income. The most import difference you need to know, is that derivatives are not eligible for the CGT discount.

How to do your Phemex taxes

By now, you've likely realised there can be a lot to crypto tax, and getting it done correctly can be tricky. Let’s find out how you can actually get your Phemex tax sorted.

ATO tax lodgement deadline

Our Australian financial year starts on the 1 July and ends on the 30 June each year, and you can prepare and lodge your tax return anytime after the 30 June up to 31 October.

The tax deadline for individual taxpayers is 31 October. Once you go past that date, your tax return is overdue, and your risk of penalties is increasing.

There is one way that you can easily extend your lodgement deadline though. You can receive an extended lodgement deadline till 15 May when lodging through a registered tax agent.

Some taxpayers find themselves with years of overdue tax returns. Unfortunately, the problem won’t just go away by ignoring it, and it’s only getting bigger in the meantime. With the ATO no doubt using the data collected from Phemex more effectively each year, it’s only a matter of time before they catch up with you.

If you do have overdue tax returns, then it’s always worth working with a good tax accountant. They’ll be able to help you get your tax affairs back up to date. In many cases, investors can even end up receiving tax refunds from years of unlodged tax returns.

Self-lodge vs using an Accountant

When lodging your tax return, there’s two ways to go about it. Self-lodge yourself through myTax (myGov), or by lodging through a tax agent.

Self-lodging your tax return is definitely more affordable, as it means you don’t have to pay for an accountant. However, you’ll need to be much more careful about how you calculate and declare your tax outcomes. Follow our comprehensive guide to self-lodging your crypto tax.

Using an Accountant does cost more, but it will save you a lot of headache, and you won’t have to worry whether your tax return was done correctly. You’ll also have someone you can ask questions and get tax advice from. If your crypto activity is particularly complex, then it might be worth looking at a crypto tax specialist to help you.

Regardless of which approach you take, you’ll need some type of tax software for recording your crypto transactions and calculating the tax outcomes.

If you’re an Australian taxpayer, then it’s advisable to use tax software built specifically for Australia, otherwise the tax calculations may not be done correctly, putting you at risk with the ATO

How to select crypto tax software

When it comes to managing crypto taxes in Australia, choosing the right software is crucial for compliance and ease of use.

Tax regulations and compliance requirements vary significantly across jurisdictions, and what works in one country may not be suitable in another. Australian crypto investors need tax software that is specifically tailored to the unique aspects of Australian tax law. It's essential that the software not only calculates these taxes accurately but also updates its tax logic as tax laws evolve.

Ensure the crypto tax software is built specifically for Australia. Otherwise you may declare your tax incorrectly or overpay more tax than required.

You should also check for the software’s ability to integrate with popular Australian and international crypto exchanges. Having good support for Phemex is a must, but you should also consider any other platforms you trade on.

Quality integrations are vital for maintaining accurate and complete records of all your crypto activities.

Crypto tax is complex, so having software that is user-friendly and intuitive will be a big help. Look for software that generates detailed, ATO-compliant reports which can be directly used for tax filings or shared with your accountant. You should also consider the level of customer support offered, and whether it's actually coming from an Australian support team.

If you don't have tax software for your crypto yet, then sign up for an account with Syla. It's the only tax software built exclusively for Australian crypto investors, and it has an industry-leading tax integration for Phemex

Using crypto tax software

Crypto tax software is designed to make doing your crypto taxes much simpler. The software will calculate all the tax outcomes for you, so you only need to import your transactions, make any edits as required, and download your final crypto tax report. All the complicated tax calculations are automatically done for you.

It’s really easy using Syla to do your crypto tax:

  1. Get started with a free account.
  2. Add Phemex as a data source and import your transactions.
  3. Add any other platforms and wallets.
  4. Review your transactions.
  5. Download your Crypto Tax Report.

Syla does all the heavy lifting for you. Your transactions will be imported and the tax calculations will be done for you. When using LTFO tax optimisation you can even achieve lower tax outcomes than you normally would.

Once you've downloaded your crypto tax report from Syla, you can either give it to your tax agent, or you can use it to self-lodge your own tax return.

Importing transactions from Phemex

The first step to getting your crypto tax sorted is to import your transactions from Phemex.

Syla has an industry-leading tax integration with Phemex. You can use the File Import in Syla.

File Import

Using a File Import is an effective way to import all your transactions on Phemex as it’s safe and easy to do.

If you get stuck, we also have an Assisted File Import process.

Download your crypto tax report

Once you have all your transactions imported into Syla, you can view them, make edits if needed and import any other Data Sources that you have.

After you’re happy with everything, you can download your Crypto Tax Report.

ATO crypto tax report

Tax software for Phemex

It's very difficult to correctly calculate all the tax outcomes of your crypto by hand unless you're a tax accountant.

If you are using a tax accountant, then you probably don’t want them doing it by hand either, as it's going to take a long time and cost a lot.

That’s where using crypto tax software can save you a lot of time and money, that you'd rather spend doing something else. 😊

Syla is the only crypto tax software designed specifically and only for Australia. Syla not only calculates all your tax outcomes to ensure you are ATO compliant, but it also optimises your tax to ensure you pay the lowest crypto tax legally possible, saving you both time and money.

  • Best value - $59 AUD for 10,000 transactions.
  • Absolute certainty - purpose-built for Australian tax law.
  • Maximise your tax savings - using Syla's proprietary LTFO method.

👉 Get started for free.


Disclaimer

The information in this article reflects our understanding of existing legislation, proposed legislation, rulings and other tax law, as at the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.

The information provided in this article is purely factual in nature and does not constitute tax advice, financial product advice or legal advice. The information is not, nor is it intended to be, comprehensive or a substitute for professional advice on specific circumstances. If you require professional advice that takes into account your particular circumstances, you should consult an appropriate professional.

Tax Questions

Still have questions?

Can I get tax statements from Phemex?

How do I download tax statements from Phemex?

Do I have to pay taxes on Phemex?

Our Australian Partners

We’ve partnered with every major Australian crypto platform to ensure crypto tax is simple and easy.

Syla supports over 500+ crypto platforms through our API Syncs, File Imports and Assisted Import.