Is Cryptocurrency Legal In New Zealand

Is cryptocurrency legal in new zealand

New Zealand Caters to Cryptocurrency Users

Is Bitcoin Legal In New Zealand? – NZ Bitcoin Legality and Taxes Explained

June 30, 2019

|In Articles

|By Harry

Is Bitcoin Legal in New Zealand?

Is Bitcoin legal in New Zealand?

Is cryptocurrency legal in new zealand

Yes. Bitcoin is legal in NZ, and it’s legal in most developed countries in 2019.

Is cryptocurrency legal in new zealand

If you have heard otherwise, you can rest assured that what you have heard is wrong. Investing, trading, and using Bitcoin for legal purchases is all perfectly above board.

Is Bitcoin Legal in New Zealand in the Same Way as the NZD?

New Zealand is one of the most digital currency friendly counties in the world.

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At least, that is the case as far as regulation is concerned. It is perfectly fine to buy Bitcoin just like you would foreign currency or gold bullion.

However Bitcoin is not considered a currency in New Zealand, i.e.

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it is not “legal tender” like the New Zealand dollar or the US dollar, instead it’s seen as a type of property.

New Zealand Bitcoin Tax Laws

If you own Bitcoin or are considering buying Bitcoin, it is important to understand what tax reporting obligations might apply.

Cryptocurrency in New Zealand is not taxed in the same way as foreign currency investments.

Instead, Bitcoin (and other forms of digital currency) is taxed in the same way as property.

When Do I need to pay Tax on Bitcoin I Own in NZ?

The easiest way to know when tax applies to cryptocurrency in NZ is to think of buying Bitcoin like buying a house. When you buy a property, you do not pay tax.

How to buy Bitcoin in New Zealand - Easy Crypto

However, when you sell a property, tax is applied to any profit you make from a sale – if you purchased the property with the intent of making a profit. With cryptocurrencies, most people are buying with the intent of making a profit, so therefore tax applies.

Is cryptocurrency legal in new zealand

If you think that isn’t the case for you, we’d strongly recommend you get some good advice on this, as particular activity (such as trading) can undermine your claims that you weren’t intending to make profits. For more detailed advice, have a chat to Tim from Cryptocurrency Tax NZ.

Record Every Crypto Disposal Event

Most Kiwis buy Bitcoin to hold like a long-term investment asset.

Is Bitcoin Legal in New Zealand in the Same Way as the NZD?

If this is how you intend to invest, calculating the applicable tax is pretty straightforward. However, if you intend to trade or make purchases with coins, tax can get a little more complicated.

In the eyes of the IRD, any time you dispose of cryptocurrency is a taxable event.

  • If you trade Bitcoin for other altcoins, tax is applicable on any profit resulting from any trade.
  • Tax is applicable whenever you exchange Cryptocurrency for fiat cash.
  • When you buy a product or service using Bitcoin, tax is applicable as this is a disposal of the cryptocurrency.

Naturally, calculating how much tax you owe when disposing of Bitcoin is difficult when doing so in retrospect.

Is cryptocurrency legal in new zealand

In this case, the best way to calculate any tax owed is to record the NZD to BTC exchange rate at the time of purchase and cashing out.

Is Bitcoin Legal in New Zealand for Everyday Retail Payments?

It is perfectly legal for brick and mortar and e-commerce businesses to accept Bitcoin payments in New Zealand, and you can see the list of them here.

However, when receiving Bitcoin payments as a merchant, it is necessary to calculate the value of coins as you receive them.

Is cryptocurrency legal in new zealand

One easy way to do this is to use a BTC payments platform which instantly converts BTC into U.S. or New Zealand dollars.

I Didn’t Know I Had to Pay Tax on Bitcoin – What do I do Now?

If you have already bought and disposed of Bitcoin, don’t worry.

For the most part, the IRD understands that some Kiwis are not aware of their cryptocurrency tax obligations.

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It is, therefore, possible to make a voluntary disclosure concerning past Bitcoin (and other cryptocurrency) disposals. For full details visit: https://www.classic.ird.govt.nz/income-tax-individual/cryptocurrency-qa.html

You can see our full guide on Cryptocurrency and Tax in New Zealand here.

Is It Possible to Avoid Cryptocurrency Taxes?

Bitcoin and cryptocurrency are perceived by some as a way to decouple from the IRD and the mainstream monetary system.

Personal taxes with cryptocurrencies

However, that doesn’t change your obligations to pay tax on profit that you make from these activities. When in doubt, simply talk to a professional tax consultant like Cryptocurrency Tax NZ or contact the IRD directly.