If you have sent or received Cardano tokens in your wallet, received staking rewards, swapped ADA for other tokens or NFTs, or in any other way dabbled in the Cardano ecosystem, you will most likely need to report this in your annual tax return. In this complete Cardano tax guide, we will explain everything you need to know about how to calculate and report your Cardano taxes, how Cardano NFTs are taxed, and how you can use Coinpanda to figure out your tax situation.
How to import Cardano transactions
The first step you must take to figure out your Cardano taxes is to import your complete transaction history to Coinpanda. This step is actually quite easy since Coinpanda has an API integration with Cardano so all you need to do is enter your public wallet address and click a button to import all transactions. If you are not already a Coinpanda user, you can go here to sign up for a 100% free account first.
Once your account is set up, simply go to the ‘Wallets’ page, search for Cardano, and click the Cardano icon to open the ‘Add Wallet’ modal.
Once the modal is open, all you need to do is enter your public wallet address and click ‘Add Account’. Later in this guide, we will also look at the different address formats Coinpanda supports today.
After adding your wallet address, simply click the ‘Sync Wallet’ button to start the import process. This can take anywhere from five seconds to 10 minutes depending on the number of transactions Coinpanda needs to import. Once completed, you will see a status message displaying the total number of transactions imported.
You might also notice that the ‘Holdings’ window in the image below displays many tokens without icons and having zero value. This is completely normal and is because these tokens are NFTs on Cardano. We will go into more detail about how Coinpanda considers NFTs later in this guide.
Many other cryptocurrency tax software platforms are claiming to support Cardano, but based on feedback from our users and from the evidence we have seen, Coinpanda is the only tax platform that can actually import and handle Cardano tokens and NFTs correctly for tax purposes today.
Cardano staking rewards
Coinpanda will import all staking rewards received in your wallet automatically. Whether you are using Daedalus, Yoroi, or another Cardano wallet does not change anything since all transactions recorded in the blockchain will be imported.
However, one thing is very important to be aware of: The Cardano API does not distinguish between ADA received as a staking reward and ADA that is simply sent from another wallet to your wallet. This means that Coinpanda cannot automatically detect if the transaction is a staking reward or not. To make sure that your tax reports are accurate, you will need to tag all transactions as ‘Staking’ so that this will be considered staking income and not a regular transaction. You can tag transactions as Staking by first clicking the three dots icon and then ‘Tag as Staking’.
If you have a large number of staking rewards, you can change the tag for multiple transactions at once by first selecting the relevant transactions on the left side and then changing the tag from the menu that appears in the bottom-left corner.
Similar to Ethereum, there is a large number of tokens on Cardano that can be either traded on centralized exchanges or swapped on a decentralized exchange (DEX) such as Sundae Swap. You might even have received some tokens in your wallet as an airdrop that you were not aware of! As discussed in the Complete Cryptocurrency Tax Guide for 2022, all transactions where a cryptocurrency is disposed of are, generally speaking, considered a taxable event.
The implication of this is that it is very important you import all transactions including Cardano tokens to a crypto tax solution like Coinpanda. Luckily, Coinpanda makes this very easy by automatically importing and identifying all token transactions! This includes both tokens sent and received, and tokens swapped on decentralized exchanges.
The image below shows an example of two transactions imported to Coinpanda.
One challenge with Cardano tokens is that a large number of the tokens are not listed on any price aggregator site such as Coingecko or Coinmarketcap. Because of this, you might see a question mark icon and the warning ‘Missing price data’ for some of your transactions, such as the example seen in the image above. This simply means that Coinpanda does not recognize the token and that no price data exists. To fix this, you will need to edit the token value manually unless you want to keep it as zero.
How to fix issues with identifying the correct token
Unfortunately, there are some limitations with the current Cardano API making it challenging to identify all different tokens correctly. However, this can easily be fixed by reporting the issue to Coinpanda customer support staff who will then update this internally in our system. When updated, you will need to re-import your transactions from API and the tokens should be identified and tracked correctly. Please follow these steps to report such issues most effectively:
- Go to the Cardano token topic in the Coinpanda community forum
- Reply to the topic and include both the token address and a link to Cardanoscan
Our support staff will then look into the specific token, make the necessary adjustments in our system, and report back when the update is completed.
NFTs on Cardano
Non-fungible tokens (NFTs) have become hugely popular lately and NFTs on Cardano are no exception. Marketplaces such as CNFT allow users to place bids and offers for NFTs in the Cardano ecosystem. Minting, buying, or selling NFTs are taxable events and such transactions must therefore be accounted for when working out your total gains and losses during the tax year.
Coinpanda was one of the first crypto tax platforms to add support for NFTs in 2021 and is still today, at the time of writing this article, the only platform that supports NFTs on Cardano. Similar to tokens discussed in the previous section, all NFT transactions will be imported automatically from API by entering your public wallet address. This includes both mintings of new NFTs, buying or selling NFTs on a marketplace, or NFTs sent from or received to your wallet.
Coinpanda will also fetch the NFT image during import and display the NFT as an image on the Transactions page. This makes it super easy to track and verify all transactions imported, and you can also see a free preview of the capital gains for every NFT transaction without upgrading your plan.
As seen in the image above, Coinpanda will import all NFTs bought, sold, sent, or received. If you have received an NFT from an airdrop or a free mint, the market value and cost basis will be zero since there are no official prices for NFTs except for the prior trading history. The same applies to NFTs sent – the value displayed will be zero. If a Send transaction is in fact a disposal or otherwise a taxable event, you should change the proceeds value to what the NFT was valued at on the day of the transaction so that the resulting capital gains will be calculated correctly.
Stake key addresses
Stake key addresses in Cardano wallets are used for managing your individual public addresses associated with staking operations. A single stake key may be used to derive a long list of unique addresses. Instead of adding each unique address separately to Coinpanda, you can also simply add the stake key directly and thus have only a single Cardano wallet in your Coinpanda account.
Cardano stake keys will always start with ‘stake’, such as stake1uymh7uuay80t… for example. By adding a stake key address, Coinpanda will import all transactions associated with this address. This means that also transfers between your own public addresses derived from the same stake key will be imported. It’s therefore important that you verify all transactions imported and make sure that any transfers between your own addresses are marked as internal transfers.
Try Coinpanda for free
Coinpanda is one of very few crypto tax software solutions that can do tax calculations for the Cardano ecosystem correctly today. All you need to do is add your Cardano wallet address to your Coinpanda account, wait for all transactions to be imported automatically, and then verify that tokens and NFTs are tracked and identified correctly.
You can sign up for a 100% free account, or first read more about how the software can help you with reporting your crypto taxes. Coinpanda supports more than 65 countries today including the US, Canada, Australia, the UK, and almost all other European countries.