Looking for new accountant

Background story is my accountant has become non-responsive and continually comes up with delays and excuses in filing my 2019-20 tax return. So I am looking to move. Hoping to find some recommendations for an accountant with the interest and skillset to work with my alternative investing ventures? Will list some details below to give a picture of the type of accountant i'm looking for.

What I am looking for in an accountant:

• A sounding board who strategises, thinks outside the box and offers solutions and options. Someone pro-active. Not looking for someone that just files returns and waits for instructions. Been there, done that and it is very detrimental to growing wealth. I am not looking for financial advice.
• Must embrace crypto or is willing to learn. I understand there is a lot of negativity around crypto. Please, I don't want this to devolve into a flame thread.
• Someone who is comfortable with international investments and structures.
• Cost of fees are not an issue.

My investment focus:

• Cryptos and early stage equity funding
• All my equity deals are into international private companies and SPVs
• I currently invest through myself and 2 discretionary trusts

Hoping I can get some good recommendations here

 

Crypto in my experience is a simple matter and the biggest problem is taxpayers who think its something special. The biggest issue I see is taxpayers who keep NO or very poor records. This is little a tax adviser can actually assist with other than guidance on how to summarise annual data so its simple. Strangely the ATO have systems that can calculate crypto profits based on exchange data they obtain directly and indirectly. I wish taxpayers could piggy back as it might save them a lot of effort. I cant provide any recommendations on software at this time. The poor records and exchange data seems one of the biggest obstacles to acceptance of crypto as a commodity. Imagine if the ASX didnt have Chess ?

Generally most cryto is acquired to hold and resell for profit. Frequent trading is slightly different in respect of records. All activities concerning crypto is often confusing but comes back to one of these kay events no matters how complicated
- A new purchase
- A sale which may mean a profit or loss
- A exchange (which is a sale and a new purchase)
- Income if crypto is lent etc

Each taxpayer must account for acquisitions and disposals based on a AUD cost and convert exchange currency (eg USD) to AUD for their records. And it doesnt matter whether actual realisation to aussie dollars occurs or not. Exchanging one crypto (eg btc) for another (eth) is a CGT event and isnt a rollover. A profit or loss will occur.. Spliting or convertiing and other such events are no different - They may end one coin and create others. Its a sale and new acquisition. There are some software based processes to assist but these often are USD based. That may not be a problem and a annual average exchange rate may simplify that rather than daily exchange rates etc

early stage equity funding varies and this may impact deductions. Unless its a loan. Some of these apparent loans may include a debt / equity swap and that can also mean deductions are affected.

I see many people who do some things I personally wouldnt do. Its not my job to provide opinions. I have also seen some average punters make some spectacular profits (and losses). The one thing i recommend is a smsf should not invest in crypto. Usually as it is impossible to allow a third party (auditor) to determine existence and they will qualify their report. Also many exchanges will only allow a wallet and account in the personal name and not that of the fund trustee and noting the fund as a party. Otherwise if all that can be overcome provided the fund has a investment strategy and risk management policy that addresses speculation and risk of loss then no problem.

There also may be sound reasons to keep CGT assets aside from some other assets. Structure may assist that to some degree.

Not sure about this : sounding board who strategises, thinks outside the box and offers solutions and options. Someone pro-active. Not looking for someone that just files returns and waits for instructions. Been there, done that and it is very detrimental to growing wealth. I am not looking for financial advice.

Sounds like you want financial advice that isnt product advice and dont mind a unexpected fee. I also find I see just 5% of what they do and they share bits and not all the details. I have loads of clients in such a position and generally have a expectation that they approach me anytime and I'm happy to assist and support but I wont just rack up a fee on my own.

One matter to consider is whether a accountant can issue a sophisticated investor / whole sale client certificate. These days insurers seem to prohibit it even if it were allowed. It ties our hands

 

Hi Paul. Thanks for the reply. I understand what you mean about majority of crypto enthusiast's mindset regarding taxation of crypto and it is frustrating as it shines a constant negative light to the legitimacy of cryptos. I can guarantee I do not fall into that camp and can account for every single one of my transactions going back several years. I see investing like a business and it is not worth jeopardising your business with dodgy practices and poor record keeping. I do use software to capture all my 10,000 transactions made on exchanges and personal wallets and have scrutinised and noted every single one of them.

To expand on my comment about 'sounding board'. Crypto is very fast moving and I like to bounce ideas off experts before making a move to limit unexpected ramifications. For example how would ATO treat crypto staking, what about paired liquid provision where you are issued a temporary LP token representing your percentage stake, conversion of eth tokens from v1 to v2 in the upcoming network upgrade, ATO would have no rulings on NFT because they only popped up start of this year so how are they treated, do nft capture tax benefits of a collectable, etc. I am inline and onboard with current ATO rulings but, due to the speed which crypto moves, there will always be grey areas that I would like to bounce off experts.

Regarding my comment about not needing financial advice. Your comment is more accurate. I am not looking for product advice but I am looking for strategic advice like tax minimisation strategies, how best to structure investments, etc.

Regarding your comment about only seeing 5% of what your clients do. I have always viewed this as detrimental to growing wealth. To get the best tailored advice you need to be totally transparent with your hand and the cards you're holding. How else can you make informed decisions if you don't know all the facts.

Hope this gives further insight into my character and why I am looking for an accountant.

 

The ATO adopt a very simple view to all forms of named events. You are either selling or buying or producing income. Often its both a buy and sell. Conversions are a disposal and new asset sometimes but on the upgrade it may well be an asset for asset swap so the costbase just converts. In time they will issue a ruling on that - or you can ask for a prvate ruling on the nft v 2 change (which they may make a public ruling).

The ATO dont consider cypto a collectable. It is not a currency in their view. Even a metal bitcoin is a store of value which relates to a digital store of value. They consider all crypto a digital currency and metal coins a subset that are portable rather than digitally stored. Sometimes a coin may be a personal use asset and the ATO general view is where cryptocurrency is acquired and used within a short period of time, to acquire items for personal use or consumption, the cryptocurrency is more likely to be a personal use asset. But, where the cryptocurrency is acquired and held for some time before any such transactions are made, or only a small proportion of the cryptocurrency acquired is used to make such transactions, it is less likely that the cryptocurrency is a personal use asset. In those situations the cryptocurrency is more likely to be held for some other purpose.

Collectables and personal use assets

I generally sugest all clients seek tax advice prior to any new major investment or change in investments etc. Structure, assesable issues etc need constant guidance. But I dont wonder what they are doing and chase them.They have my direct details specifically for that. Tax principles are generally fairly structured in approach and crypto doesnt change that

Happy to discuss if you wish.

 

Fantastic post Paul. Brilliant how you boiled it all down to first principles. Adds clarify to what can be perceived to be a cloudy issue. You've actually just shifted how I perceive and approach tax issues. Very grateful for this discussion. Have taken and learnt a lot.

 

Most tax advice comes back to primary principals. It can seem daunting to clients but is often very straight forward and is often far less complex that they think. I used to advise accountants, lawyers and financial planners and also wrote and filmed video seminars for professional members of three organisations (CAs, CPAs and Tax Institute) so you have get it right and think smart and on your feet..

Most complicated tax advice isnt that complicated. What is complex is breaking is apart and explained the pro's and con's and plain english so the client understands THEIR choices. I just help people make good choices. The advice should certainly guide the client

 

Some gold advice Paul. Would love to talk more sometime in the near future if you have availability to take on more clients next financial year.

 

@Paul@PFI

I have an option for getting paid a portion of my salary as Bitcoin - what are the tax implications from an immediate standpoint, and when I sell Bitcoin to AUD.

Scenario:

1. suppose my current salary is $150k in AUD and I change my salary to be, $75k AUD and $75k Bitcoin, how do I calculate the tax?
2. If our salary is 75k AUD and 75k Bitcoin, and I sell my bitcoin after 12 months, what tax is paid when the bitcoin is sold?

Thank you

 

bitcoin is just a currency so would be taxed on the value
if you are not trading the bit coin it would be a capital asset so you would be taxed on the gain after you converted it. Its like changing a foreign currency

 

1. Being paid in bitcoin breaches the PAYG withholding rules and Fair Work Act potentially. It isnt money. A employer cannot pay you in "kind". What will your payslip show ?
2. You are fully assessable as it is still income.
3. Any sale of bitcoin may produce a gain / loss on any change in value between the value (in AUD) when it was issued and when it was sold

If you employer paid you in taco shells or tennis balls its the same.

 

You are either in a restaurant typing replies or playing tennis.

 

I was going to say bags of dogfood too. Just sitting here at work constantly amazed by some ideas.

Fair Work Act

Paying wages
Employees must be paid at least monthly and can be paid by one, or a combination of, the following:

• cash
• cheque, money order or postal order, payable to the employee
• electronic funds transfer (ie. EFT or bank transfer).

Paying a employee (even on their request) in gold, silver, yugi-oh cards, pokemon, cans of beer, tacos, tennis balls or dog food is not lawful. Strangley paying them in 1c pieces may actually still be legal provided its Australian currency.

 

That would be a good deal: a 1c coin is 2.6 grams, copper percent is 97%, so 384 coins would be 1kg = $3.84, and current copper price is around $7 per kg. I'll have my salary in 1c coins please!

 

Mixed prices are closer to $2.30 since old "coppers" are actually closer to being a bronze alloy. That why they used the old 1 and 2c to make the Sydney Olympic bronze medals.

 

Thanks for all the replies and insights. Is there any advice to avoid double taxation on crypto

 

What double taxation ?

If you are a tax resident of Australia this poses no tax concern for any other country. Unless of course, you dont disclose the profit in Australia.

Where is the exchange ?

 

Apologies Paul for the confusion.

My question is, given that I need to pay income tax on any bitcoin I earn as part of my salary, do I also need to pay capital gains tax on the future sale of that bitcoin?

Many thanks.

 

Yes. Its doesnt seem to fit within the scope of the incidental issue eg obtaining bitcoin to buy a software program and then having too much which is sold off soon after. The choice to accept bitcoin and with the employer break Fair Work laws (and even tax withholding laws) and accept bitcoin is a consequence that may produce a tax issue. I also feel in that case any gain or loss may even be ordinary income and is not a CGT event. The nature of the receipt seems supported by a isolated profit making intention as part of the remuneration choice. A private ruling as to whether its CGT or ordinary income would be wise.

 

Is your employer based in Australia?

I know someone that does get paid in BTC and declares the equivalent value in AUD on the date of receipt as income. He then holds onto it like any other asset where the cost base is the same as what he already declared as income so there is no double taxation. When he eventually sells, he may be eligible for 50% CGT discount as well.