Cryptocurrencies are gaining ground as investment assets and so are likely to become taxable.
Baucher Consulting continues to study cryptocurrencies and the Inland Revenue's response to this asset class.
Get in touch if you want to discuss the tax implications of your holdings.
Inland Revenue and Crypto
We’ve yet to hear Inland Revenue’s formal view on the GST treatment of cryptocurrencies. It’s a sign of some of the issues Inland Revenue have clearly encountered that the most recent release is a draft issues paper on whether cryptocurrency received by an employee as part of their regular remuneration is subject to PAYE or FBT.
It includes some discussion on salary sacrifice arrangements. It concludes, on balance, that the PAYE rules apply.
The Law Foundation
Has published a report (September 2018) called Regulating Cryptocurrencies in New Zealand. It recommends
NZ needs to jump on blockchain train – A central bank-issued cryptocurrency, thriving cryptocurrency exchanges and the ability for businesses to trade in GST-free cryptocurrency are needed if Aotearoa New Zealand is to enjoy the vast potential benefits from this technology
The Growth of Cryptocurrencies underlies the need for comprehensive tax reform in NZ especially in relation to capital
We’re going to hear a lot more about cryptocurrencies and blockchain technology as they move (very rapidly) into the mainstream. As Professor Alex Sims pointed out recently regulators are struggling to keep up with both the pace of change and the likely implications.
Inland Revenue like many other tax authorities around the world is still figuring out the income tax and GST implications of cryptocurrencies.
Read our article Cryptocurrencies and Taxing the Leading Edge of Change