IRD has announced a heightened focus on cryptocurrency transactions. With over $7.8 billion worth of crypto dealings identified, the IRD is using its sophisticated analytics tools to expose those who fail to declare income from crypto activity. Are you one of the 227,000 New Zealanders identified by the IRD as investing or trading in cryptocurrency? We have noticed that IRD has recently ramped up its activity. This is not limited to cryptocurrency taxes, but a general increase is back on compliance. Our opinion is that this is due to a change of government and IRD staff being removed from COV ..read more

This article follows up on our previous discussion regarding the tax implications of bankruptcies like FTX and Celsius. As you might recall, IRD’s position is that investors wouldn’t be able to claim losses on inaccessible crypto funds until bankruptcy proceedings were finalized. Now that the proceedings for Celsius and other exchanges have concluded, some investors have recovered a portion of their locked crypto. This raises the question: How do you account for recovered currency? Understanding Your Loss Calculation: Let’s use an example to illustrate the process: In 2021: Jim purchased 1 Bi ..read more

We’d like to start preparing your 2024 financial statements and tax return and need information from you. To accurately calculate your taxes, we need to have details of every single transaction involving buying, selling, swapping, earning/staking, gifting, airdrops, ICOs and margin/futures trading We’d like to ensure we have all information (and identify any missing parts) before commencing your work. This checklist will provide us with an overview of what to expect, to ensure your work is complete and accurate. If you have not already done so, please complete a stock take of all tokens on 31 ..read more

The surge in the popularity of Bitcoin ETFs has many New Zealanders wondering about the tax implications. Here’s a simplified guide to help you understand how a Bitcoin ETF or other Foreign Investment Funds (FIFs) are taxed in New Zealand. Just because you invest in a Bitcoin ETF does not give us the required information to provide tax advice. A Bitcoin ETF is only the name of the investment. It could equally be a S&P500 ETF, or a NZX10 ETF. To provide correct tax advice, we need to know what you are investing in and the jurisdiction of that investment (i.e., the fine legal print); what ar ..read more

The IRD has made it clear that losses suffered from exchange platforms going under are only deductible if bankruptcy proceedings have been finalized. Please see our article here for more information. A recent development in the Celsius bankruptcy has resulted in many clients recovering a portion of their lost crypto. Claiming tax deductions for recovered crypto depends on the completion date of the bankruptcy proceedings. If finalization occurs before March 31, 2024, a potential deduction exists for the 2024 tax year. The deduction would be calculated as follows: Cost value of crypto initially ..read more

The Finance and Expenditure Committee of New Zealand has prepared a report from their cryptocurrency enquiry. It focuses on recommending and advising the government to prepare for regulatory policies and find a legal stance on cryptocurrencies. There was a recommendation regarding the taxation of cryptocurrency (quoted below). “We recommend that Inland Revenue explore, in consultation with the digital assets industry in New Zealand, whether tax incentives for digital asset service providers are necessary or appropriate, in addition to continuing work to provide clarity around the tre ..read more

We are often asked, what expenses can I claim for my cryptocurrency activity? The answer will depend on whether you are classified as an investor or a trader of cryptocurrency. Profit from both investor’s and traders’ sales of cryptocurrency is taxable income. However, they are taxed under different sections of the Income Tax Act. One is carrying on an active business activity, while an investor is a largely passive activity. Generally, if you are a trader, you can claim a wider range of expenses than if you are an investor. The Trader vs Investor Distinction There is no hard and fast rule for ..read more

We’d like to start preparing your 2023 financial statements and tax return and need information from you.   To accurately calculate your taxes, we need to have details of every single transaction involving buying, selling, swapping, earning/staking, gifting, airdrops, ICOs and margin/futures trading   We’d like to ensure we have all information (and identify any missing parts) before commencing your work. This will provide us with an overview of what to expect, to ensure your work is complete and accurate.  If you have not already done so, please complete a stock take of all to ..read more

Many of our clients made some profits in the crypto market during the 2022 Financial year (from 1 April 2021 to 31 March 2022), and now they have to pay taxes which are due by 7 April 2023. But, some of these clients haven’t set aside enough money for taxes, and the market crashed, and some crypto exchanges went bankrupt in the 2023 Financial year. So now they’re struggling to pay up by the deadline. We’ve been getting a lot of emails from worried clients about what to do if they can’t pay. If you miss the deadline, you’ll get charged with late payment penalties (LPP) and use of money interest ..read more

As we approach the end of the 2023 Financial year, the task of gathering exchange information and tracking tokens may seem overwhelming. However, we are here to help. This article provides a comprehensive guide on what is needed to calculate your taxes with precision and efficiency, along with an overview of what to expect. A stock take of crypto that you held on 31 March 2023 To make sure we get your closing stock calculation right and catch any missing transactions, we require a stock take report on the quantities of each cryptocurrency token you held on 31 March 2023. This way, we can compa ..read more