- April 23, 2024
- Posted by: legaleseblogger
- Category: Related News
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# Curiosity about Cryptocurrency and Tax Implications
I am just curious about this crypto thing. With shares there are PIE funds that gets around the FIF IRD thing but you need to FIF only applies if you have $50k worth of acquiring cost. How is tax applied to crypto? From what I have read it seems to point to the difference between what it was sold for and what it was bought for, so this is like a capital tax? Does the $50k FIF apply at all?
## Exploring Cryptocurrency Taxation in Depth
I am intrigued by the world of cryptocurrency and its tax implications. When it comes to traditional investments like shares, there are specific funds like PIE funds that can provide tax advantages, circumventing certain tax regulations like the FIF IRD rules, with the condition that the FIF rules only apply if the acquiring cost exceeds $50k. However, when it comes to cryptocurrency, the taxation process seems different.
## Understanding Taxation on Crypto Transactions
It appears that tax on cryptocurrency is determined by the difference between the selling price and the buying price, resembling a capital gains tax structure. I am curious to know if the $50k FIF threshold applies to cryptocurrency transactions as well.
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****** just grabbed a
Accountant here that does a lot of work with Crypto
If you’ve sold, transferred, traded or disposed any cryptocurrency this creates a taxable event. The taxable amount is the difference between the value of when you bought the cryptocurrency and when you disposed of the cryptocurrency, less any fees incurred in the transaction (gas fees or payment processing fees etc) The sum of all of the taxable amounts (profits less losses) of all of your taxable events is your taxable income from cryptocurrency. This taxable income is charged at your marginal tax rate and that tax is paid to IRD. This means even if you haven’t yet cashed out this gain to fiat or NZD, the above events are still taxable (or deductible), unfortunately.
The $50k FIF does not apply to Crypto held in self custody, although if you buy BTC in an ETF the FIF rules will apply to that as it as overseas share investment held.
https://www.ird.govt.nz/cryptoassets