Filing your taxes? here’s what you need to know about cryptoassets
Make sure you include your cryptoasset income on your tax return this year. It’s not too late.
If you’re getting ready to file your tax return for 7 July and have a cryptoasset or two then we suggest you read on.
Whether you bought some crypto as part of your investment strategy, or receive it as payment, take note. In most cases, the amounts you get from selling, trading, or exchanging cryptoassets are taxable. Even when you use a crypto exchange based outside New Zealand.
Cryptoassets encompass a wide range of products including payment tokens, security tokens and utility tokens. There are various names for cryptoassets such as:
When it comes to tax, what they’re called isn’t important. What matters is how they’re used.
If you’re buying cryptoassets for the purpose of disposal, you need to pay income tax on your profits. Remember disposal includes trading one cryptoasset for another cryptoasset, these are barter transactions.?
The bottom line is, if you have taxable income from cryptoasset activity, you need to file a tax return.
Before you can include cryptoasset?net income (or loss)?in your tax return, you’ll need to calculate the New Zealand dollar (NZD) value of your transactions and work out your cryptoasset income and expenses.
Calculating crypto values in NZD
You must take reasonable care to use an appropriate value for your cryptoasset transactions and use a consistent method in determining the value of it. Be sure to keep records of the valuation method you use.
Working out crypto income and expenses
Cryptoasset income can come from things like mining, staking, lending, selling, exchanging, or getting paid in cryptoassets for services you provide.
Generally speaking, you can claim expenses related to: the cost of your cryptoassets, interest charged on money you’ve borrowed to buy your cryptoassets?(only if any profit from their sale is taxable), depreciation of capital assets as well as some other expenses related to your crypto activity.
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Completing your tax return
When completing your tax return, if your cryptoasset income does not fit into any boxes, such as business or self-employed income, you need to put your net cryptoasset income (or loss) in the 'other income' box.?To claim a loss, you need to show that if you'd made a profit, it would have been taxable. You can do this by attaching your calculation to your return in myIR.
For more information including exchange site options and online calculators to calculate your income, visit our ird.govt.nz/cryptoassets.
A reminder that income tax returns are due 7 July
If you’ve made an error or omission in a return you’ve already filed, let us know as soon as you can so we can fix it. You may need to make a voluntary disclosure.
What about GST?
Cryptoassets are not subject to GST when they are bought or sold but do have GST implications when they are received as payment for normal business activities.
Non-fungible tokens, or NFTs, are subject to GST when sold to someone in New Zealand.
If you're providing a mining service, you're making a supply for GST purposes, so GST applies.
And lastly, a note on cryptoasset record keeping
While not the most exciting topic, record keeping is an important one. You'll need to keep records of your cryptoasset transactions, for at least 7 years, to support the position taken in your tax return. This is true even if you no longer have any cryptoassets.
If you use cryptoasset exchanges, you should download your transaction history regularly. Cryptoasset exchanges may only keep records for a short period of time, or the exchange may no longer exist when you do your tax return, so don’t get caught out.
If your cryptoasset mining or staking activity is GST registered, you will need to keep the required GST records.
Find out more about record keeping requirements on our website.
Have more questions about cryptoassets?
We’ve only touched on the basics in this article. If there’s more general information that you want to know about your tax obligations with cryptoassets then please comment below or if your question contains personal information regarding your taxes then please send us a message in myIR.
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2 年Thanks for posting