HOW DOES THE IRD TAX CRYPTO?

In New Zealand, the IRD categorises cryptocurrencies as property. Making gains from their sale, trade, or mining is subject to Income Tax but not Capital Gains Tax. Any profit derived from these transactions is taxed at the owner's marginal rate, potentially as high as 39%. Losses may be deductible against other income and lessen overall tax responsibilities. Rigorous record-keeping is vital for accurate tax assessments.

Non-Taxable Crypto Transactions

Purchasing crypto with fiat currency, transferring crypto between personal wallets, or merely holding crypto are not considered taxable events according to current IRD guidelines.

Taxation of Staking Returns

In New Zealand, the returns from staking cryptocurrencies are taxed as income. Staking rewards, in the form of additional crypto assets, must be reported on the tax return for the year they are received. These rewards should be valued at their fair market value from the time they were acquired.

Calculating and Reporting Crypto Tax

Taxpayers must maintain detailed records of all cryptocurrency transactions, noting dates, amounts, and market values at the time of each transaction. This information is crucial for accurately determining tax liabilities.

IRD Monitoring and Compliance

The IRD can track cryptocurrency transactions via data-sharing arrangements with exchanges. This oversight ensures adherence to tax laws and helps identify any undeclared transactions. IRD are currently sending out review letters to taxpayers they believe deal in crypto currency.