Describe how IRAS treats gains on digital tokens and keep the records it would ask for.
Plenty of people who have bought and sold crypto for a few years have no proof of what kind of activity it was. In Singapore, whether a crypto gain is taxed depends on the way you bought and sold. The evidence for that is the record you kept. If your only history is what an exchange still displays, you have very little to show anyone.
IRAS sets out its position in an e-Tax Guide on the income tax treatment of digital tokens. The guide deals with gains and income from buying, selling, mining and receiving tokens. IRAS has revised it over time and may revise it again. When you need it, go to the IRAS website and read the current version instead of depending on someone's summary, and these notes count as a summary. They give the principle only and don't try to cover every situation.
Farah has spent four years buying and selling crypto across three exchanges. Farah has also shifted coins between two wallets and swapped one token for another dozens of times. One friend tells Farah that Singapore has no capital gains tax, so none of this matters. A second friend says IRAS can tax people who trade often. Each friend has part of the answer. Farah's real difficulty lies elsewhere. If IRAS asked which kind of gains these were, Farah could not show it, because Farah has no records beyond what the exchanges still display.
Singapore has no capital gains tax. When you sell an asset you bought to hold as a long-term investment, the profit is a capital gain, and it is generally not taxed. Shares and property are treated this way. Digital tokens and other alternative assets fall under the same principle.
The name you give your activity doesn't decide the matter. IRAS looks at what you actually did. When your buying and selling looks like a trade or a business, IRAS can treat the gains as income, and income is taxed.
IRAS doesn't rely on a single test. It weighs several factors together and decides each case on its own facts. These factors are sometimes called the badges of trade. They include the intention you had when you bought, how frequently you buy and sell, how long you keep an asset before selling, whether you bought with borrowed money, and how organised and systematic the activity is.
Darren bought bitcoin to keep for years. Most of it is held in self-custody, and Darren will sell only when the rules in Darren's alternatives policy call for a sale. Taken together, this has the look of a long-term investment. Compare a person who trades several times a day, buys with borrowed money and counts the profits as monthly income. That profile looks far more like a trader.
Few people sit at either end. Most fall somewhere between a pure long-term investor and an obvious trader, so IRAS works from several factors instead of one simple rule. For anyone in that middle ground, records are the main way to show where they fall.
Tokens you get as payment for work, from mining or as rewards can raise different questions, and the e-Tax Guide deals with these cases. If your situation is unclear or the amounts are large, get advice from a tax professional.
You might hold crypto for the long term and never owe tax on the gains. You still need records, for three reasons.
The first is that records answer questions from IRAS. They show what you did and why you did it. A tidy history of a handful of purchases, each held for years, supports treating your gains as capital. An empty folder leaves you with a harder conversation.
The second is that an exchange can't be trusted to hold your only copy. Exchanges close, merge with other exchanges and delete old data. Module 5 covers the 2022 exchange failures, when some customers couldn't log in at all. A history that lived only in an exchange's app could be lost along with the exchange.
The third is that you need the records for your own decisions. In Lesson 8.2, "Rebalancing and exit rules", you set your rebalancing band. That band can only work if you know what you hold and what you paid for it.
Log every purchase, sale, swap and transfer, including coins you move between your own wallets and exchanges. A transfer means moving coins from one of your own accounts to another, and it is not a sale. If you don't record it, though, the coins seem to vanish from one place and turn up in another.
Give each line these fields:
the date the asset the type of transaction the quantity the price and the total in Singapore dollars at the time any fees the platform or wallet for a transfer, where the coins came from and where they went, plus the transaction ID from the block explorer a short note on why, for example "Long-term holding", "rebalancing back to cap" or "exit rule: withdrawals paused" for a purchase made in US dollars, the exchange rate you used
Use Singapore dollar values from the moment of each transaction, since IRAS works in Singapore dollars. Where you paid in US dollars, the exchange rate you noted shows how you got to the Singapore dollar figure.
One filled-in line could read: 3 March, bought 0.01 BTC on a licensed exchange for S$900 plus a S$5 fee, reason long-term holding.
The same method works for gold, P2P loans and collectibles. For each transaction, write down the date, the amount, the cost in Singapore dollars, the fees and your reason.
You don't have to reconstruct years of history at one sitting. Begin with what you hold right now and enter each holding as an opening position.
Next, download every transaction history your exchanges still make available. Store the files somewhere under your own control, such as your computer or your cloud storage. That way they are still there if an exchange shuts down or deletes its data.
Then set up the columns using the fields listed above. Once they are in place, each new line should take about a minute. From now on, enter every new transaction in your own records when you make it, including transfers between your own wallets and exchanges.
Set up a records sheet for your crypto and other alternatives, with columns for the details the IRAS factors make relevant. Fill in the holdings you already have.
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