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2023-03-31

How Investing vs Trading impacts tax

In most cases of buying and selling cryptocurrency as a retail investor, you are participating in investing rather than trading. The two are treated differently for tax purposes.

  • Investing is subject to capital gains tax or income tax, depending on the nature of the transaction.
  • Trading in this case refers to self-employment which is subject to income tax and National Insurance Contributions.

The key difference between investing and trading – along with the different tax treatments, is how losses generated in the crypto-activity can be used.

In their guidance, HMRC have explicitly stated that they would expect it to be exceedingly rare that any crypto-activity constituting buying & selling crypto would be classified as “trading”.

If you are uncertain, speak to a tax advisor as there are always exceptions, including but not limited to, developing tokens and large scale mining.

How is crypto tax calculated in the United States?

You can be liable for both capital gains and income tax depending on the type of cryptocurrency transaction, and your individual circumstances. For example, you might need to pay capital gains on profits from buying and selling cryptocurrency, or pay income tax on interest earned when holding crypto.

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blog
31
 
Mar
 
2023
 - 
10
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Product update - 23rd May 2022

At Summ (formerly Crypto Tax Calculator), we are constantly working on improving our product so you can have the best experience at tax time. Check out our blog for the latest product updates.

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This tax guide is regularly updated: Last Update  
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New Integration and Features

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We’re excited to announce that our integration with Cronos is now live!

Simply copy and paste your Cronos wallet addresses in the 'Import Data' page, and we will pull in all of your Cronos transactions.

Support for ERC-1155 transactions

We are now able to process and reconcile transactions involving ERC-1155 tokens. This includes minting, buying, selling and converting a ERC-721 to a ERC-1155. This is applicable for: Ethereum, Polygon, Avalanche, BSC, Fantom and Arbitrum.

Add comments on transactions and new comment filter

Have you ever found yourself wanting to flag and come back to a certain transaction? Or perhaps, wanting to write down further context for your future self or your accountant? This is where our new comment functionality comes into use. You are now able to leave comments on transactions, filter by transactions with comments, as well as delete comments.

New report: German SO report

German users can now generate the SO report, with all the relevant fields already pre-filled with their data. In order to gain access to this report, head to the 'Get Report' page, and select the SO report. Note that this report is only available in PDF format.

New report: Canada TurboTax report

Canadian users can now download a Canada Turbotax PDF. Users can paste those values into TurboTax Online to file their reports to the CRA.

New category: collateral withdrawal

In addition to our existing 'collateral deposit' category, we’ve now added a collateral withdrawal category. This category can be used for withdrawing collateral from a borrowing and lending protocol, where the asset moves back into your wallet.

Accountant feature: revoke access to team members

For users on our accountant plan, admin accountants can now revoke access to team members. By revoking a team member's access, they will no longer be able to access your Accountant Dashboard. Any client data which they have been working on will be saved, and will still be accessible by any other invited team members.

The information provided on this website is general in nature and is not tax, accounting or legal advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and seek professional advice. Summ (formerly Crypto Tax Calculator) disclaims all and any guarantees, undertakings and warranties, expressed or implied, and is not liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or Consequential Loss or damage) arising out of, or in connection with, any use or reliance on the information or advice in this website. The user must accept sole responsibility associated with the use of the material on this site, irrespective of the purpose for which such use or results are applied. The information in this website is no substitute for specialist advice.

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