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The Inland Revenue (IRD) has a council for cryptocurrency investors, waiting for specific indications on how their income should be taxed.
He says people should treat money made by buying and selling cryptocurrencies in the same way, or similar, with which they would make money by buying and selling gold.
That is, pay the tax on the profit made by selling a currency, only if that currency was purchased with the intention of resale.
So if you buy units in a currency for $ 1000 and sell them for $ 1800, you will pay taxes on that $ 800 profit.
However, if you could sell your units for only $ 600, your loss of $ 400 would be tax deductible.
Other expenses may also be tax deductible.
The IRD told interest.co.nz that this comparison with gold "can be useful when considering the tax treatment of cryptocurrencies".
Yet: "If customers need further guidance, we can discuss their particular circumstances".
The information Sheet on gold, IRD has focused on interest.co.nz a, explains: "As with any personal property, the derivative amounts on the sale of gold will be income under s CB 4 if the & # 39; Gold was acquired for the dominant purpose of disposal …
"To ascertain what a person's subjective purpose is at the time he or she acquired property is a very specific assessment of the fact.
"The particular circumstances of the situation must be carefully considered, and any statement that gold has not been acquired for the dominant purpose of disposal should be supported by clear and convincing evidence …
"[D]the purchase and sale of a property as a long-term investment, a hedge against inflation, the diversification of the portfolio or a reserve of value outside the monetary system is not sufficient to deny a dominant purpose of disposal. "
The information sheet does not mention GST.
IRD states: "Preparatory work is underway for the issue of public guidelines on the tax treatment of cryptocurrencies".
However it can not say when this guide will be completed and how it might appear.
Nor can he comment on the extent to which he is actually applying his tax advice in the meantime – none of which has even been included on his website.
Challenges and opportunities
Head of the Commercial Law Department of the University of Auckland, Alex Sim, claims to have been contacted by a number of people from abroad, curious to know why a technologically advanced country like New Zealand does not have a guide to tax cryptocurrencies.
He believes that there could be a natural reluctance on the part of the government to support cryptocurrencies, because of all the risks posed by trade.
Yet she is worried that the silence of the authorities on the issue is only forcing investors to move abroad, where they are even less protected.
Sims recognizes that the taxation of income from cryptocurrencies will have its challenges.
For example, it may be difficult to keep track of a large number of small exchanges. And try to ascertain whether investors – especially early adopters – have bought currencies with the intention of resale can be complex.
Sims also recognizes that there will be people who will deliberately try to play the system, but believes that this is not a reason for not having a system.
She is not sure how much taxable income New Zealand traders have ever done, as a number of people would have made money on paper, but would not have sold them and collected them.
What the other tax authorities are doing
The tax partner of Deloitte, Ian Fay, wrote to piece explaining how other countries are grappling with how to tax cryptocurrencies.
He says: "In the United States, IRS has released the guide that cryptocurrency is owned when held in capital account and earnings are subject to capital gains tax. Miners of currency should pay taxes on the value of the currency who receive.
"Likewise, both the United Kingdom and Australia earn from the sale of cryptocurrencies under their tax rules on capital gains.
"In terms of GST, the purchase of cryptocurrencies and their use to purchase other goods and services could result in double taxation.The purchase of the cryptocurrency unit would be subject to GST and therefore any subsequent purchase with the cryptocurrency it would also be subject to GST.
"Considering cryptocurrencies as currency for GST purposes would remove GST from the sale or purchase of any unit, solving the double taxation problem.
"Australia is moving to treat cryptocurrencies as a currency for GST purposes (July 1, 2017) for this reason."
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