Who’s hot, who’s not? Based on guidance issued today, those who trade in cryptocurrency and do not pay tax on gains are looked upon unfavourably by the IRD.

The IRD has published a Q&A page detailing its views on a number of issues relating to the tax treatment of gains and losses attained through cryptocurrency trading. The IRD has explicitly stated that it views cryptocurrency as property rather than as a currency. The key takeaway from this publication is that if you have turned a profit from your crypto trade, you may be liable to pay tax based on any gain.

This declaration is not a surprising nor novel view. In 2014, the United States’ IRS declared that it viewed cryptocurrency as property. What has come as a surprise to more novice traders is the news that their earnings may be taxed. One infamous Reddit post out of the US summed up the conundrum: an office assistant with an annual salary of US$47k was hit with a US$50k tax bill after selling Bitcoin at its peak.

This IRD guidance is a must read if you are a New Zealand resident cryptocurrency trader and/or you or your business receives or makes payments via a crytpocurrency.

Given the timing of the IRD’s publication – just days after the end of Financial Year 2018 – it would be prudent to analyse your crypto wallet and make sure your affairs are in order.