You can find this toggle under Settings -> Portfolio & Tax section. Switching this toggle might change the results of your 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
When the toggle is switched on, all your collateral deposits and withdrawals are treated as non-taxable transfers. These transactions do not change your overall account balance and there are no capital gains or losses. See the example below:
Date | Category | Asset | Market price | Cost base | Capital gains | Overall balance |
Jan. 1, 2022 | Buy | 1 ETH | $4,000 | $4,000 | - | 1 ETH |
Feb. 1, 2022 | Collateral deposit | 1 ETH | $3,000 | $4,000 | - | 1 ETH |
Mar. 1, 2022 | Collateral withdrawal | 1 ETH | $2,500 | $4,000 | - | 1 ETH |
Apr. 1, 2022 | Sell | 1 ETH | $3,500 | $4,000 | ($500) | 0 ETH |
Toggle off
When the toggle is switched off, all your collateral deposits and withdrawals are treated as taxable disposals and acquisitions. The capital gains/losses are realized in the transaction. See the example below:
Date | Category | Asset | Market price | Cost base | Capital gains | Overall balance |
Jan. 1, 2022 | Buy | 1 ETH | $4,000 | $4,000 | - | 1 ETH |
Feb. 1, 2022 | Collateral deposit | 1 ETH | $3,000 | $4,000 | ($1,000) | 0 ETH |
Mar. 1, 2022 | Collateral withdrawal | 1 ETH | $2,500 | $2,500 | - | 1 ETH |
Apr. 1, 2022 | Sell | 1 ETH | $3,500 | $2,500 | $1,000 | 0 ETH |