Tax on Crypto Currencies
Crypto currencies such as Bitcoin and Ethereum have been really popular investment options in recent times. Their value has surged which has lead to exponential gains for investors and it might be easily forgotten that while even though un-regulated Crypto currencies are still taxable.
IRD has recently released guidance around taxing crypto currencies. According to the IRD Crypto currencies are treated like property for tax purposes. Although trading in crypto currencies may happen in a digital realm but tax obligations still apply in New Zealand.
Just like with property when you acquire crypto currency for the purpose of selling or exchanging it, the proceeds you make from selling it are taxable. Tax is also applied when one crypto currency is swapped for another. You don’t need to cash out to dollars to create a tax obligation. Likewise, if you receive a crypto currency as payment for goods or services, this is considered business income and is taxable. Tax rules for foreign exchange don’t apply when it comes to crypto currencies.
Dealing with Crypto Currencies and still not sure of your obligations? Contact us for more guidance.