Cryptocurrency and Tax Guide for New Zealand
How should cryptocurrencies be regulated for tax purposes in New Zealand? Take a closer look at the latest summary regarding crypto and tax in NZ.
Note: The information discussed in this guide are current as of the date of publication. For the latest information about tax and crypto, consult a tax accountant and/or visit the official IRD website.
Wondering about taxes on crypto? We’ve put together the latest updates on tax and cryptocurrencies to make things easy for you when it comes to tax time.
Cryptocurrencies and blockchain technology were not conceived when our current tax legislation was written, and they don’t neatly fit any of the categories.
The IRD has now published guidance to explain how New Zealand’s existing tax laws should be applied to bitcoin and other cryptocurrencies.
Cryptocurrency tax guide
The key things to know about tax and crypto are:
- Income tax will normally apply to any “disposal” of cryptocurrency – this includes whether sold for NZD/USD or traded for another cryptocurrency. You don’t need to pay income tax on any cryptocurrency you are holding and haven’t sold or swapped.
- Income tax applies to income on crypto holdings, e.g. staking or yield.
- Crypto assets are exempt from GST (Goods and Services Tax). This means that when you buy $100 of cryptocurrency you don’t need to pay $15 (15%) GST. However normal GST treatment applies for goods and services that are traded with cryptocurrency being used for payment.
Income tax on cryptocurrency
Just like any other activity that you do to make a profit (running a business, trading stocks, setting up a lemonade stand) you need to pay income tax on the profits you make.
Or, if you make a loss, this can be offset against the tax you have paid in other areas (say the PAYE you pay on your salary).
A. If you haven’t sold your cryptocurrency, then no tax applies. However if you’ve moved your cryptocurrency from one coin to another, eg BTC to ETH, then that move is taxable. You will need to work out what the NZD value of the BTC was when you bought it, and then work out what the NZD value of the ETH was when you made the trade. The difference between those two NZD amounts is taxable.
A. That’s unfortunate! But on the bright side, it means you can offset that loss against the income you made from other sources. You do this at the end of the tax year when you file your tax return.
A. After the end of the tax year (31 March) you need to file an IR 3. In this you include all of the income you have made in the year from all sources (including wages, dividends, cryptocurrencies, etc) and all of the tax you paid. The form then helps you calculate if you have paid too much tax or not enough.
GST on Cryptocurrency
In 2021 the IRD made a change to remove GST on cryptocurrencies like bitcoin. This change was retrospectively applied from 1 January 2009, meaning that no GST applied to past transactions.
The GST exemption is on buying and selling cryptocurrency, but if you use cryptocurrency to buy something else, GST applies as normal on the item you are buying.
Related: More details on the GST Policy for cryptocurrencies.
Need more help?
You may wish to talk to an accountant to help you sort out the tax you owe, or are owed on your cryptocurrency activities.
If you have any comments or suggestions, jump on our forum thread and join the conversation.
Also, if you’re wondering what banks in New Zealand are saying about cryptocurrencies, check out our article here where we include statements from Westpac, Kiwibank, Bank of New Zealand, and more.
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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated March 15, 2023