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SaladFingers

NZ tax rules

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Thought it would be a good idea to start a discussion about tax rules in NZ. The IRD website is somewhat confusing and contradictory - see below.

https://www.ird.govt.nz/campaigns/2018/cryptocurrency-tax.html

"Cryptocurrency is treated as property for tax purposes. There are no special tax rules for cryptocurrencies – ordinary tax rules apply."

https://www.ird.govt.nz/income-tax-individual/cryptocurrency-qa.html

"5. Does tax apply only when I cash out cryptocurrency into NZD?

No. Any disposal that creates a realised gain or loss needs to be recorded at the time it occurs.

‘Disposal’ includes swapping one type of cryptocurrency for another or exchanging cryptocurrency for New Zealand dollars or another fiat currency such as US dollars or Euros."

It seems they want to class cryptos as property, however swapping one 'property' for another is a taxable event when cryptos are involved.

It could also be argued that there is no 'realised gain or loss' until crypto is exchanged for fiat?

Has anyone spoken with the IRD or an accountant about tax and received more concrete guidance on the rules?

Cheers

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I've been trying to find this out myself and have come to the conclusion that IRD will simply apply whatever rule makes them the most money, hopefully the guvmint will sort it out before crypto becomes mainstream. My opinion is that XRP is an asset and should be treated as such for tax purposes.

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I'm thinking I will make a voluntary disclosure once there are clear rules. As I've done some trading to increase my xrp holdings it won't be as straight forward as if I'd just bought and held, that said my trading profits may not even be substantial enough to be taxed :lol:

I'm picking up some NEX in the upcoming Neon Exchange ICO so that will be interesting to see how they tax that, holders can stake tokens to receive payouts from exchange fee generated revenue, it is also a registered security in Europe.

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Also taking a wait and see attitude.

 

It looks as if they will treat it differently depending on how you use it...  

To buy Goods & Services, then you will pay GST.

To pay employees, then you will pay PAYE.

If you hold it, treated as property.

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On 4/17/2018 at 9:30 AM, SaladFingers said:

Thought it would be a good idea to start a discussion about tax rules in NZ. The IRD website is somewhat confusing and contradictory - see below.

https://www.ird.govt.nz/campaigns/2018/cryptocurrency-tax.html

"Cryptocurrency is treated as property for tax purposes. There are no special tax rules for cryptocurrencies – ordinary tax rules apply."

https://www.ird.govt.nz/income-tax-individual/cryptocurrency-qa.html

"5. Does tax apply only when I cash out cryptocurrency into NZD?

No. Any disposal that creates a realised gain or loss needs to be recorded at the time it occurs.

‘Disposal’ includes swapping one type of cryptocurrency for another or exchanging cryptocurrency for New Zealand dollars or another fiat currency such as US dollars or Euros."

It seems they want to class cryptos as property, however swapping one 'property' for another is a taxable event when cryptos are involved.

It could also be argued that there is no 'realised gain or loss' until crypto is exchanged for fiat?

Has anyone spoken with the IRD or an accountant about tax and received more concrete guidance on the rules?

Cheers

Awesome, I've been wanting to do this for aaaaages...  but, you know... life and sh*t:rofl:

 

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21 hours ago, SaladFingers said:

I'm thinking I will make a voluntary disclosure once there are clear rules. As I've done some trading to increase my xrp holdings it won't be as straight forward as if I'd just bought and held, that said my trading profits may not even be substantial enough to be taxed :lol:

I'm picking up some NEX in the upcoming Neon Exchange ICO so that will be interesting to see how they tax that, holders can stake tokens to receive payouts from exchange fee generated revenue, it is also a registered security in Europe.

Hey all.  I'm a Kiwi but just moved to the US.

Spoke with my accountant prior to leaving just getting a few things in line.  I asked him about crypto.  He said "sh*t your honest bringing that up"  I explained that I was just buying and intend to sell long term at a higher price just like a stock.

There is no dividend and I am not trading so not deriving any income from it.  

He said in that case it is at this point treated like a stock and there is no capital gains tax on it or income tax.  Effectively tax free.

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8 minutes ago, Blpinfinity said:

He said in that case it is at this point treated like a stock and there is no capital gains tax on it or income tax.  Effectively tax free.

I'd be very careful with this info because others have said it is a security in NZ law.

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1 minute ago, Trickery said:

I'd be very careful with this info because others have said it is a security in NZ law.

Sure don't rely on my advice seek your own from a professional.  That was simply what my accountant said to me.

Out of curiosity how is a security treated in NZ tax law? 

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1 minute ago, Trickery said:

39%

Interesting. 

I would be curious as to how it could be classified that way, in the case of XRP especially. My understanding is that a security is normally a derivative as opposed to the core asset it's self. Something like futures or options.  XRP is the asset not a derivative of anything else, given there is an XRP futures market that would be a pretty good foundational argument no?

 

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12 minutes ago, SaladFingers said:

So we have property, security and stock so far... this is going to get complex :lol:

 

Income tax? gaming tax? who knows but one thing to be aware of is that IRD will need proof of intent when investing, ie if you bought a crypto so you could buy online gaming rewards and the crypto gained in $value when you sold them after no longer wanting to play the game, that would surely be a capital gain and therefore tax free.

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On 4/20/2018 at 12:54 AM, SaladFingers said:

😂 I’ll be moving to Vanuatu for a while if they want 39%.

Yip I will be seeking other options that's for sure.  I can't see that happening though especially. Ripple are dead confident xrp is not a security and have said publicly it is categorically not a security.

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