Quick answer
Weighted average cost blends all your purchase prices into a single average — a simple and widely required method for crypto.
Accounting
Australia
Canada
Germany
India
Weighted Average Cost
A cost basis method that averages the total cost of all holdings of an asset to determine the per-unit cost for gains calculations.
AustraliaCanadaGermanyIndiaUnderstanding Weighted Average Cost on crypto
Weighted average cost (WAC) is a cost basis method that calculates the average acquisition cost per unit by dividing the total cost of all holdings by the total number of units held. When units are sold, the gain is calculated using this average cost rather than the cost of any specific lot. WAC is equivalent to Canada's Adjusted Cost Base and similar to HMRC's pool average. It is simple to calculate, eliminates the need for lot-level tracking, and is required or standard in several jurisdictions. WAC is recalculated with each new purchase, ensuring the average always reflects the current total position.
Weighted average cost (WAC) is a cost basis method that calculates the average acquisition cost per unit by dividing the total cost of all holdings by the total number of units held. When units are sold, the gain is calculated using this average cost rather than the cost of any specific lot. WAC is equivalent to Canada's Adjusted Cost Base and similar to HMRC's pool average. It is simple to calculate, eliminates the need for lot-level tracking, and is required or standard in several jurisdictions. WAC is recalculated with each new purchase, ensuring the average always reflects the current total position.
What this means for your crypto activity
Simpler than lot tracking
WAC is simpler to maintain than FIFO or specific identification — a single average replaces lot tracking.
India acceptance
In India, WAC/FIFO is the accepted approach for determining cost of acquisition of VDAs.
Australia flexibility
In Australia, WAC is a permissible method alongside FIFO for identical assets.
Different outcomes
WAC produces different gains from FIFO and HIFO — usually somewhere between the two in outcome.
Canada ACB
Canada's ACB is effectively WAC applied to identical properties — required, not optional.
- WAC is simpler to maintain than FIFO or specific identification — a single average replaces lot tracking.
- In India, WAC/FIFO is the accepted approach for determining cost of acquisition of VDAs.
- In Australia, WAC is a permissible method alongside FIFO for identical assets.
- WAC produces different gains from FIFO and HIFO — usually somewhere between the two in outcome.
- Canada's ACB is effectively WAC applied to identical properties — required, not optional.
Seeing it in action
Example scenario
Fatima buys 2 ETH at $2,000 each and later buys 1 more ETH at $2,600. Total cost: $6,600 for 3 ETH. WAC per unit = $6,600 / 3 = $2,200. When she sells 1 ETH at $3,000: gain = $3,000 − $2,200 = $800. Under FIFO her gain would be $1,000 (selling the $2,000 lot first); under HIFO it would be $400 (selling the $2,600 lot). WAC falls between these extremes.
How this works across jurisdictions
- Australia
Weighted average permissible as an alternative to parcel (lot) tracking; ATO does not mandate a single method.
- Canada
ACB (identical to WAC for identical property) is mandatory under the Income Tax Act.
- Germany
Average cost (Durchschnittsmethode) is a commonly accepted method for crypto cost basis calculation.
- India
Weighted average or FIFO accepted for VDA cost allocation; cost of acquisition is the key deductible amount under Section 115BBH.
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