This article addresses the tax implications of how the IRD will treat cryptocurrency.

With the proliferation of activity in trading Cryptocurrency around the world, New Zealand included, it has spawned a whole new crypto vocabulary. Terms such as bitcoin, block chain, mining, crypto wallets along with a whole range of ‘currency’ if you like, each with their own names. It’s rapidly evolving and becoming more mainstream.

Traders by default
When it first emerged, the IRD viewed it like just another currency, albeit a digital currency. The IRD has since made a fundamental change in its position on Cryptocurrency Assets. The IRD now view that Cryptocurrency is an investment that buyers ‘trade’ with the intention of later selling for a profit; the default position deems anyone who holds Cryptocurrency assets to be “traders”.
 
The implications of this ‘trading’ position is any gains on buying and selling is now taxable income. Conversely trading losses are also tax deductible.

Investors versus Traders
However, in some circumstances, you may be a genuine long term investor who invests in Crypto assets. In such circumstances you need to show the dominant purpose was not to dispose of it for profit; for example, maybe it was part of a diversified portfolio of investments.

The IRD also delineates intention of the purchase of Crypto as different from the purpose.  
For example, the intention to hedge against inflation is different from the purpose to dispose of it later.

You can read more via these links below outlining the different circumstances and requirements thereof and see if they apply to you.

The IRD have aligned the treatment of Cryptocurrency Assets like it treats Gold.
https://www.ird.govt.nz/cryptoassets/individual
https://www.ird.govt.nz/cryptoassets/individual/buying-selling/acquiring-sell-exchange

Record Keeping
With these changes in mind, keeping accurate records is now essential to stay within regulations. The IRD website dedicates a page to outline what and how records are now expected to be kept for Cryptocurrency.
Read more here ….

Your tidy records will also be essential in evidencing your ‘purpose’ in the case of a long term investor, and assessing profits and losses if you are deemed a trader.

Our end of year questionnaires that you complete and sign each year cover Cryptoassets. We will compile your tax returns based on the information you provide.