As cryptocurrency adoption grows in New Zealand, many investors are unaware of their tax obligations with the IRD. Understanding these requirements is essential for compliance and avoiding penalties.
If you haven’t already got on top of your Crypto taxes, the earlier the better as IRD has invested significant resources to gather information and understand more about New Zealander’s crypto transactions even if they are using offshore platforms or operating on-chain.
Taxable Cryptocurrency Activities
Crypto-to-Crypto Trading
Trading one cryptocurrency for another is taxable in New Zealand. This includes:
· Bitcoin to Ethereum swaps
· Converting any cryptocurrency to stablecoins
· Using crypto to purchase NFTs
Staking and Yield Earning
Cryptocurrency staking and yield farming generate taxable income, including:
· Proof-of-stake rewards (Ethereum, Cardano, Solana)
· DeFi liquidity mining rewards
· Lending interest from crypto platforms
Losses on Crypto Trading
Some people may have lost money in crypto trading, depending on the circumstances this may become a taxable loss which can reduce your taxes.
Self-Custody and Record Keeping
Self-custody tools like MetaMask and hardware wallets give you complete control over your digital assets. While this provides security benefits, it also makes you responsible for maintaining accurate tax records of all transactions. Fortunately, the majority of blockchain transactions are publicly recorded on ledgers available online.
There is software which can assist with gathering this information even if you have a mix of tokens across multiple chains, wallets, or custodians like Binance.
If you have dabbled in Crypto or are a Crypto pro, please let your YHPJ client manager know if you haven’t already.
