Investing in cryptoassets? Time to think about your tax obligations
Inland Revenue (IR) is paying particular attention to customers who are actively dealing in cryptoassets but not declaring income from them in their tax returns.
Contrary to popular belief, people are not invisible on blockchain. The IRD is leveraging analytics and data from local and international exchanges to identify customers who are not paying their tax on cryptoassets as well as those with significant cryptoassets. According to IR, they have identified 227,000 unique cryptoasset users in New Zealand undertaking around 7 million transactions with a value of $7.8 billion.
Cryptoassets and tax
Cryptoassets (also known as cryptocurrencies, cryptographic assets, digital financial assets, digital tokens, virtual currencies, NFT’s) are treated as a form of property for tax purposes. Any profit you make from selling, trading or exchanging cryptoassets is taxable. It is very rare for profits from the sale of cryptoassets to be considered non taxable capital gains.
If you are making money from crypto you should be thinking about your tax obligations on this income and the risks of not declaring all related taxable activities. For NZ tax residents, this includes cryptoassets acquired or disposed of overseas — for example, using a non-New Zealand-based crypto exchange.
Cryptoassets are not subject to GST when they are purchased or sold, but do have GST implications when they are received as payment for normal business activities.
Correcting your tax
If you have earned income or made realised gains from cryptoassets which haven’t been included in your income tax return, we would recommend making a voluntary disclosure to IRD. Please get in touch with us if you are in this position and we can provide advice and assist in correcting your tax position.
More information
You can visit the IRD website for more information:
If you have any questions regarding tax obligations on cryptoassets, please contact your usual Campbell Tyson advisor.
Cheers
Mat
Mathew Robertson, Director
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This article contains general information only and based on information available at the date of publication. You should obtain advice for your personal circumstances.