Understanding the new IRD Cryptocurrency tax guidelines

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  • The IRD recently announced new tax guidelines for Cryptocurrencies in New Zealand. They can be found here.

    There are two key points to keep in mind:

    Keep records of your trades

    Records need to be kept because when you fill out your IR 3 at the end of the tax year you will need to state all the crypto trades you made that resulted in a net profit or loss.

    Fortunately with MyBitcoinSaver all records of trades including the original values are on your transaction page. This will make it super easy to fill out your tax form. However if you used the Bitcoin you bought through MyBitcoinSaver to buy other crypto on exchanges you will need to keep those records yourself. Usually an exchange will show you a history of your trades but getting the value of each coin on the day will take a bit more work if that is not provided.

    To backdate the NZD value of your Crypto you can use the dates of your trades and then use the charts on Coinmarketcap to make an accurate estimate on the value for each Crypto.

    For tax purposes cryptocurrency is treated as property, not currency.

    Any sale or trade of cryptocurrencies that creates a gain or a loss needs to be recorded and declared at the end of the tax year.

    Please note this not only includes NZD to Crypto trades but also Crypto to Crypto trades as well. For example if you buy BTC with NZD and you make a gain on the initial value of the NZD, then you will need to declare that gain. Furthermore if you buy ETH with the BTC you made and you make a gain on that trade you will also need to declare that gain as well.

    In conclusion

    IRD states that it is important to note some of these policies will be a temporary measure until better ones are implemented. Until then it is vital to follow the IRD recommendations when trading/buying Cryptocurrencies to avoid getting into any trouble.