You can find this toggle under Settings → Tax → Income category options section. Switching this toggle might change the results of your Income Report and Capital Gains Report. The default setting depends on your tax jurisdiction. The choice of settings may impact your tax liability, so it's essential to consult with your accountant or local tax professionals about your situation before making any changes.
Toggle on
If the toggle is switched on, the mining transaction is treated as income on your reports. When you dispose of this asset later, the cost base will be the fair market value at the time you mine the asset. See the example below:
Date | Category | Asset | Market price | Cost base | Capital gains | Income |
Jan. 1, 2022 | Mining | 1 ETH | $4,000 | $4,000 | - | $4,000 |
Feb. 1, 2022 | Sell | 1 ETH | $3,000 | $4,000 | ($1,000) | - |
Toggle off
If the toggle is switched off, the mining transaction is treated as a zero-cost buy since there was no cost associated with obtaining the asset. When you dispose of this asset later, the cost base is $0. See the example below:
Date | Category | Asset | Market price | Cost base | Capital gains | Income |
Jan. 1, 2022 | Mining | 1 ETH | $4,000 | $0 | - | - |
Feb. 1, 2022 | Sell | 1 ETH | $3,000 | $0 | $3,000 | - |
In both examples, the total ‘gains’ are the same. The difference is when the tax is paid (i.e., at what point in time) as well as which category the taxation sits in (e.g., income vs. capital gains).
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