New Zealand Crypto Tax Guide 2024
Wondering how crypto is taxed in New Zealand? We have you covered with our expert guide to cryptocurrency taxes in New Zealand for 2024.
Do you have to pay tax on crypto in New Zealand?
Yes. The Inland Revenue Department (IRD) is clear that crypto is subject to Income Tax.
How much is crypto taxed in New Zealand?
Crypto is subject to Income Tax of up to 39% depending on your total annual income.
Can the IRD track crypto?
Yes, the Inland Revenue Department can track crypto as it can request data from crypto exchanges.
There’s a misconception that crypto is anonymous. While you don’t need to provide your personal details to use many non-custodial wallets, you do have to provide these details to use the vast majority of centralized crypto exchanges.
As part of a crackdown on crypto, the IRD started requesting that crypto exchanges share customer data and transaction data so that the IRD can more accurately identify crypto investors for tax purposes. We don’t know the full extent of the details shared, but it may also include wallet addresses used to deposit or withdraw crypto assets. In other words, if you’ve traded using centralized crypto exchanges at any point, chances are the IRD already knows about your transactions.
How is crypto taxed in New Zealand?
The IRD first issued guidance on the tax implications of crypto in 2017. The IRD views crypto assets - including tokens and NFTs - as property for tax purposes.
Unlike many other countries, New Zealand does not have a specific Capital Gains Tax in place for property. Instead, profits from crypto investments will be taxable at your marginal Income Tax rates.
While the crypto guidance from the IRD is minimal, the tax treatment of some transactions has been clarified.
When you dispose of a crypto asset and make a profit, for example, you’ll pay Income Tax on that profit. Disposals of crypto include:
Selling crypto for NZD or other fiat currencies
Trading crypto for crypto
Spending crypto on goods or services
Lending crypto - if you no longer retain beneficial ownership or received a token in exchange representing your loaned capital
As well as this, the IRD is clear that there are some instances where acquiring crypto may be subject to Income Tax as well, including:
Airdrops (if they’re business income, part of a profit-making scheme, or ordinary income when received on a regular basis)
Of course, there are a huge number of crypto transactions not covered in the current IRD crypto tax guidance. The lack of guidance does not mean these transactions aren’t taxable. You should speak to an experienced crypto accountant for advice on the tax implications of these investments.
Crypto tax rates
Your crypto tax rate in New Zealand is the same as your marginal Income Tax rate. You can see the Income Tax rate brackets for 2024 below:
|Up to $14,000
|$14,000 - $48,000
|$48,000 - $70,000
|$70,000 - $180,000
New Zealand uses a progressive Income Tax system. This means you won’t pay a flat tax rate on your entire income. Instead, you’ll pay progressively higher tax rates on different portions of your income the more you earn.
How to calculate crypto taxes
There are two different things you may need to calculate in order to calculate your crypto taxes:
The value of crypto income
Profits and losses from disposing of crypto
We’ll cover both.
How to calculate profits and losses from crypto
Calculating the value of crypto income is simple, but time-consuming. You’ll need to identify the fair market value in NZD of any crypto income on the day you received it. For example, if you mine Bitcoin, you’d need to identify the fair market value in NZD of any Bitcoin mining rewards on the day you received them.
As the price of crypto fluctuates so much, this means you’ll rarely have a steady value throughout a given financial year. So unless you’re using crypto tax software, you’ll need to do this manually for each different receipt of income.
How to calculate profits and losses from crypto
Calculating profits and losses from crypto is simple. To start, you need to know your cost basis. This is however much your crypto cost you to acquire, plus any allowable fees, like purchase fees.
If you otherwise acquired your crypto - like through an airdrop or as a reward - you’ll use the fair market value of your crypto or a zero-cost basis valuation in some instances.
Once you know your cost basis, to calculate your gain or loss, subtract your cost basis from the sale price of your crypto. If you otherwise disposed of your crypto, like through trading, spending, or gifting it, you’ll use the fair market value of your crypto on the day you disposed of it instead.
If you have a profit, you’ll pay Income Tax at your marginal rate on that profit. If you have a loss, you won’t pay tax and you can use this to reduce your taxable income (more on this in a moment).
Cost basis method
Our example above is simplistic. It doesn’t account for when you’re dealing with multiple assets of the same kind as many crypto investors do. For example, if you have several Bitcoin - all with a different cost basis - how do you know which cost basis to use? This choice can have a significant impact on your tax bill.
This is where a cost basis method comes in. This method dictates the order in which you disposed of your crypto. In New Zealand, investors may use two different cost basis methods:
FIFO (First In, First Out): This method states the asset you acquired first is the first asset you disposed of. So you’ll always use the first crypto you acquired as your cost basis for disposals.
WAC (Weighted Average Cost): This method states you should use the average cost basis for a given group of assets to calculate your cost basis for disposals. You can calculate this by adding up the total amount you paid to buy your asset(s) and dividing it by the total amount of coins/tokens held.
Read next: What is cost basis in crypto?
Crypto capital losses
You don’t pay tax on crypto losses, and although nobody likes a poor investment, these losses are actually good news for your tax bill as you can offset losses against profits in order to reduce your overall tax liability.
For example, if you had a $3,000 profit from selling Ethereum and a $2,000 loss from selling Bitcoin, you can subtract your loss from your profit, leaving you with a $1,000 taxable profit.
What about taxes and stolen crypto?
If you’ve had crypto stolen, the IRD is clear that you may be eligible to claim a loss, but there are some specific rules you need to know about.
The amount you can claim is the cost you initially paid to acquire your crypto, not the value of it at the time it was stolen. As well as this, you may only claim the loss if the stolen crypto would have been taxable had you sold or otherwise disposed of them.
You’ll need plenty of evidence to prove your crypto was stolen as well in order to claim a loss. If you later receive your crypto back or receive compensation or insurance after claiming a loss from theft, you’ll need to include the amount recovered as income.
Is any crypto tax free?
Not all crypto transactions are taxed. You won’t pay tax on crypto when:
You buy crypto with fiat currency like NZD
You move crypto between your own wallets or exchanges
You hold crypto as an investment
You receive crypto as a gift
You receive crypto as a result of a hard fork
When do you have to pay tax on crypto?
In New Zealand, the financial year runs from April 1 to March 31 the following year. The deadline for reporting your taxes for the financial year is July 7.
So the current financial year is March 31, 2023 to April 1, 2024. You’ll need to report any profits, losses, or income from crypto in your tax return by July 7, 2024.
How to report crypto to the IRD?
Once you have all the correct information you need from your crypto transactions, you can report your income in your MyIR account on the IRD site. If you cannot do this online, you can print off and fill out the Individual Tax Return Form (IR3) to post it.
How to calculate your crypto taxes with Koinly
Now you know how crypto is taxed and how to calculate and file your taxes in New Zealand - let’s take a look at how it works with Koinly.
Koinly saves you hours by calculating your crypto tax obligations for you. Here's how easy it is:
Sign up for a free Koinly account.
Select your base country (New Zealand), currency (NZD), and cost basis method (FIFO).
Connect Koinly to your wallets and exchanges. Koinly integrates with Binance, Coinbase, Kraken, and hundreds more. (See all)
Let Koinly crunch the numbers. Make a coffee.
Ta-da! Your data is collected and your Complete Crypto Tax Report is generated!
To download your crypto tax report, upgrade to a paid plan from $59 per year- you can pay in crypto too!
Send your report to your accountant, or complete your tax return yourself using the figures from your Koinly report.
With all that out the way, let’s take a look in further detail at the different tax implications of common crypto transactions.
How are different transactions taxed?
Buying cryptoTAX FREE
Buying crypto with fiat currency like NZD is tax free.
Selling cryptoINCOME TAX
Any profits from selling crypto for cash are subject to Income Tax at your marginal rate.
Trading cryptoINCOME TAX
Any profits from trading crypto for another cryptocurrency are subject to Income Tax at your marginal rate. This includes different kinds of cryptocurrencies, like NFTs, stablecoins, tokens, and more.
Transferring crypto between your own walletsTAX FREE
Moving crypto between your own wallets, or indeed between exchanges you’re using to sell or trade crypto, is tax free. A disposal only happens when the IRD deems the crypto to have changed ownership.
Holding cryptoTAX FREE
As you’ve not disposed of your crypto, and there’s no Wealth Tax in New Zealand (yet), holding crypto is tax free.
Mining cryptoINCOME TAX
Mining crypto may be subject to Income Tax twice - on receipt and on disposal. Mining rewards may be assessable income and subject to Income Tax based on the fair market value in NZD upon receipt. If you later dispose of your mining rewards by selling, trading, spending, or gifting them, any profit would also be subject to Income Tax.
If you’re mining crypto as a business you may be able to claim a deduction relating to your business costs, for example, hardware, electricity, and so on.
Staking cryptoINCOME TAX
The IRD hasn’t released specific guidance on staking rewards, but its likely that staking rewards will be treated the same as mining rewards from a tax perspective. This means you’ll likely pay Income Tax upon receipt of staking rewards, as well as Income Tax on any profit if you later dispose of staking rewards.
Airdrops of cryptoPOTENTIAL TAX
Airdrops tax is complicated as it all depends on why you received the airdrop. The IRD guidance states that airdrops may be taxable upon receipt if a person carries out certain activities in advance with the intention to qualify for an airdrop. Whereas if the airdrop was ‘passively acquired’ it may be tax free upon receipt and disposal.
Gifting cryptoINCOME TAX
Gifting crypto is a disposal, so if you’re giving crypto to friends, families, or indeed strangers, and you make a profit, that profit would be subject to Income Tax.
For recipients, gifts of crypto are tax free upon receipt. If you later dispose of the crypto, any profit would be taxable.
NFT taxesINCOME TAX
From a tax perspective, NFTs are treated the same as any other crypto asset. That means profits from trading or selling NFTs will be subject to Income Tax. As well as this, buying NFTs with crypto would also be a disposal, and any profit subject to Income Tax.
DeFi taxesPOTENTIAL TAX
The IRD hasn’t released any guidance on the tax implications of DeFi transactions yet - but that doesn’t mean your transactions aren’t taxable. You should speak to an accountant for bespoke advice on your investments, but the conservative approach is to treat profits from trading tokens - including trading LP tokens - or income from earning new tokens from DeFi investments as taxable income.
Crypto businesses taxes
So far in this guide, we’ve only covered tax on crypto for individuals. If you’re running a business, your tax liability may vary.
If your primary business activity involves any of the following, you are likely classed as a crypto business:
Owning/running a cryptocurrency exchange
Potentially cryptocurrency trading for income or as a service (depending on the volume of trades and other factors)
Even if your business does not undertake these activities, you’re subject to tax if you receive or pay cryptocurrency for services.
If you’re using crypto in business transactions - for example, using crypto as a form of payment for goods and services - you’ll need to pay tax as this is what’s known as a barter transaction. You’ll need to calculate the fiat value of any crypto at the point it was received to calculate your taxable income, and if you’re GST registered, you must return GST on that sale, as you would if you’d received NZD. If you later dispose of crypto you received as payment for goods and services, any profit is taxable.
What records do you need to keep for the IRD?
You should keep excellent records of your crypto transactions for tax purposes. This can help you navigate a potential audit easily. The records you should keep include:
Date of any transactions
Type of transactions (buy, sell, trade, etc.)
Details of any income received from activities such as staking or lending
The total number of units
The value at the time of the transaction in NZD
Bank and exchange records
Any wallet addresses you have
What happens if you don’t report crypto to the IRD?
If the IRD believes you’re failing to report crypto in your tax return or misrepresenting your income from crypto in your tax return, it will investigate. The IRD generally can go back as far as four years to reassess your tax return - although there’s no time limit if a taxpayer has submitted a fraudulent or wilfully misleading tax return.
The penalty for tax evasion in New Zealand is 150% of the resulting shortfall in tax paid. The IRD may also choose to prosecute, with a fine of up to $50,000 and/or imprisonment of up to 5 years.