Ernst & Young LLP (EY), one of the world’s largest professional services and accounting firms, has launched the “EY Cryptoasset Accounting and Tax” (CAAT) tool - which is reportedly a software program that allows users to calculate how much they owe in taxes “for cryptocurrency transactions.”
According to the press release announcing the software, EY’s software for filing taxes on capital gains from crypto transactions has been introduced in the US as “part of the EY strategy to lead the industry” in developing blockchain-related accounting solutions.
Commenting on the US rollout of EY’s tax software for digital assets, Marna Ricker, EY’s Americas vice chair for tax services, remarked:
EY CAAT exemplifies our commitment to exceptional client service in a changing landscape. We are excited to offer an innovative technology specifically to address our clients' needs in the cryptoasset space. I appreciate the efforts of the EY Foundry and professionals across our practice who have made this breakthrough.
As explained in EY’s press release, the crypto tax software was created by using “recently acquired technology assets” and according to various new patents. Moreover, the CAAT suite was also developed using EY’s standard “processes for total functionality.” EY Foundry, a subsidiary of EY’s Tax division, was responsible for making the appropriate acquisitions in order for EY to build its tax software for cryptoassets.
EY's CAAT is reportedly designed to be used by institutional investors who may have transacted in cryptocurrencies. Notably, EY revealed in its latest announcement that the “Big Four” auditing firm has seen “significant increases in the number of clients that hold and trade” cryptocurrencies.
In time for Tax Deadline?
EY's new tool is not primarily aimed at institutional investors, and it is unclear whether they will shift their focus to cater to the smaller scale traders. Currently this niche is still served by smaller outfits such as BitTaxer, which focus on serving the individual trader.
With the U.S. tax deadline around the corner - 15th April - it is likely EY will not serve this market of 'smaller-scale' traders for the 2018 tax year.
Michael Meisler, partner at EY and head of the company’s blockchain-related tax department, noted:
The initial validation we have received from the market has been phenomenal, but it only represents the beginning. EY professionals and clients alike are eager to leverage this technology. EY CAAT is the hallmark of our efforts in cryptoassets and blockchain from a Tax perspective globally, and we will continue to work hard to make it the product of choice for EY clients.
According to EY, its tax software has been designed specifically for high net worth individual (HNWIs) - even though it may also be used by taxpayers from lower income brackets.
Filing taxes on capital gains made from trading cryptocurrencies can be challenging, however there are several guides available online to help users get started. Here are five useful things to know about cryptocurrency taxes before tax season starts for US residents in April.