Crypto Taxes
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5 Foolproof Tips to Avoid Crypto Tax in New Zealand

5 Foolproof Tips to Avoid Crypto Tax in New Zealand
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You can save thousands of dollars on your tax bill legally. 

While tax evasion is a serious crime, New Zealand crypto investors use legal tax avoidance strategies to take home more profits. 

In this guide, we’ll break down the basics of how cryptocurrency is taxed and share five simple tax-saving tips that you can get started with today. 

How is cryptocurrency taxed in New Zealand? 

In New Zealand, cryptocurrency is subject to income tax when it is earned or disposed of. 

When you earn cryptocurrency, you’ll recognize income based on the fair market value of your crypto at the time of receipt. Examples of this include earning referral, mining, and staking rewards. 

When you dispose of cryptocurrency, you’ll recognize income based on how the price of your crypto has changed since you originally received it. Examples of disposals include selling your crypto, trading it for another crypto, and gifting your crypto. 

For more information, check out our guide to how cryptocurrency is taxed in New Zealand

How can I avoid crypto taxes in New Zealand? 

It’s important to remember there is no way to legally evade taxes on cryptocurrency. In the past, the IRD has requested information from New Zealand exchanges to crack down on tax fraud. 

Remember, the penalties for tax evasion are serious. If the IRD chooses to prosecute, the maximum penalty is a fine of $50,000 and imprisonment of up to 5 years. 

We strongly recommend against tax evasion in any and all circumstances. Instead, you should consider using the strategies below to legally reduce your tax liability. 

5 simple ways to avoid crypto taxes in New Zealand 

Hold your cryptocurrency 

The simplest way to avoid cryptocurrency taxes is to hold your crypto for the long-term. Remember, there are no taxes for holding cryptocurrency or transferring crypto between wallets that you own. 

Realize profits in low income years 

New Zealand has a progressive tax system. That means that you’ll pay higher tax rates as you progress through different tax brackets. 

As a result, many investors choose to realize profits on cryptocurrency in years where their income is low. For example, selling cryptocurrency in a year when you are in between jobs can potentially save you thousands of dollars. 

Harvest your losses 

Disposing of your cryptocurrency at a loss comes with tax benefits. When you lose money on a cryptocurrency trade, you can offset your income for the year — whether it’s income from your cryptocurrency investments or income from your job! 

realizing losses on crypto

Deduct relevant expenses 

Deducting relevant expenses can help you reduce your taxable income. 

The type of expenses you can claim vary depending on whether you are in the business of trading cryptocurrency. The IRD does give several examples of expenses that are generally deductible on its website. These include: 

  • The cost of your cryptoassets (including relevant transaction fees) 
  • Depreciation of relevant capital assets (such as computers and hardware)
  • Other expenses related to cryptoasset activity (such as electricity for cryptocurrency miners) 

Use crypto tax software 

Filing your taxes incorrectly can cost you thousands of dollars. Remember, the penalty for tax evasion is 150% of your shortfall!  

If you’re having trouble reporting your taxes, crypto tax software like CoinLedger can help. The platform can automatically import transactions from exchanges like CoinSpot and blockchains like Ethereum and help you generate a comprehensive tax report in minutes. 

Get started with a free CoinLedger account today

Frequently asked questions 

Do you have to pay taxes on crypto in New Zealand? 

Yes. In New Zealand, cryptocurrency is subject to income tax. 

How much does crypto get taxed in New Zealand? 

In New Zealand, cryptocurrency is taxed between 10.5-39% depending on your income bracket. 

Do you have to pay taxes on crypto if you don’t sell? 

There are some situations where you are required to pay taxes on cryptocurrency even if you don’t convert to fiat currency. For example, crypto-to-crypto trades and earned cryptocurrency income are subject to tax. 

Can you write off crypto losses? 

In New Zealand, you can use crypto losses to offset your income for the year (including income from your job). 

Which country has no tax on cryptocurrency? 

Countries like Portugal, Singapore, and the United Arab Emirates have no crypto taxes for individual investors. For more information, check out our list of crypto-tax free countries.

Frequently asked questions

Let’s cap things off by answering some frequently asked questions about cryptocurrency taxes.

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