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The Ird Says People Should Consider Money Made Selling Cryptocurrencies - Bought With The Intention Of Resale - As Taxable, Until It Releases Specific Guidance On The Matter

The Ird Says People Should Consider Money Made Selling Cryptocurrencies - Bought With The Intention Of Resale - As Taxable, Until It Releases Specific Guidance On The Matter

The IRD says people should consider money made selling cryptocurrencies - bought with the intention of resale - as taxable, until it releases specific guidance on the matter The Inland Revenue (IRD) has a piece of advice for cryptocurrency investors, pending it releasing specific guidance on how their incomes should be taxed. It says people should treat money made buying and selling cryptocurrencies in the same, or similar, way they would money made buying and selling gold. That is, pay tax on the profit made by selling a currency, only if that currency was bought with the intention of resale. So if you buy units in a currency for $1000 and resell them for $1800, youd pay tax on that $800 profit. Yet if you could only resell your units for $600, your $400 loss would be tax deductible. Other expenses may also be tax deductible. The IRD has told interest.co.nz this comparison to gold may be useful when considering the income tax treatment of cryptocurrencies. Yet: If any customers need further guidance, we can discuss their particular circumstances. The information sheet on gold, the IRD has pointed interest.co.nz to, explains: As with any personal property, amounts derived on the disposal of gold will be income under s CB 4 if the gold was acquired for the dominant purpose of disposal Ascertaining what a persons subjective purpose was at the time they acquired property is a very fact-specific assessment. The particular circumstances of the situation need to be carefully considered, and any assertion that gold was not acquired for the dominant purpose of disposal would need to be supported by clear and compelling evidence [D]escribing property as being acquired as a long-term investment, a hedge against inflation, for portfolio diversification, or as a store of value out Continue reading >>

New Zealand's Ird Clears Fuss Around Taxes On Cryptocurrencies

New Zealand's Ird Clears Fuss Around Taxes On Cryptocurrencies

April 4, 2018 Stan Peterson Regulation News New Zealand IRD (Inland Revenue Department) has made a move on the cryptocurrency traders and businesses by reminding them to pay their taxes on cryptocurrency which is considered property and be aware of the consequence of evading taxes. New Zealand IRD reminds of cryptocurrency tax obligation or face consequences According to the General Manager of New Zealand Financial Innovation and Technology Association (FintechNZ), James Brown New Zealand is becoming a global blockchain centre through its active embracement of cryptocurrencies and blockchain. However, the New Zealand government is not avoiding the chance to collect revenue from this lucrative sector as Inland Revenue (IRD) is clamping down on traders and businesses that use cryptocurrencies. IRD is reminding the crypto users of their tax obligations and the consequences of avoiding them. Tony Morris, the leader of New Zealand IRD customer segment said the organization is working towards eliminating the bad actors that abuse the system: People who may be non-compliant are something were looking at, and how we can improve the information we get and work closely with international authorities to work out how we can best do that. Now, Inland Revenue has taken the digital currencies under the same wing as properties for the taxation purpose meaning traders have to pay taxes on cryptocurrency capital gains. IRD has issued a FAQ on its website for people regarding the tax status of cryptos. The website provides a clear for tax purposes, cryptocurrency is property, not currency. If your business accepts crypto as a payment for good and services, it is considered business income and is taxable. According to the New Zealands business income taxation rule, it would be taxable in Continue reading >>

Cryptocurrency Tax Obligations In New Zealand

Cryptocurrency Tax Obligations In New Zealand

The IRD agent confirmed to me that we do not have capital gains tax in place so if you're investing your own cash then pulling it out for profit later on it is not tax deductible. Mining on the other hand is classed as an income which tax needs to be declared on and you are required to pay tax once you convert your crypto back to nzd. If you mined 1 bitcoin and cashed out at 2 bitcoins you would pay tax on the nzd equivalent of 2 bitcoins. You are not required to pay tax until it hits your bank in nzd. Think of yourself as a gold miner who mines gold then sells when the price is right. Power, rent and equipment can all be deducted from your primary income if you're running at a loss also. Information from Cryptocult member, NZ Chartered Accountant and Partner in a firm (to contact him see details below): If you acquire btc for the purpose of disposal, IRD default position is that any gain or loss will be taxable income. This is their default starting position because btc is normally acquire for the dominant purpose of disposal. Unlike alternative investments (such as shares or bonds, or other personal property), btc is a non-income producing asset and does not provide any benefit when being held. Therefore, the nature of btc strongly indicates that it was acquired for the dominant purpose of ultimately disposing of it; otherwise why would you buy it? There may be some circumstances where IRD may accept that btc has was acquired for purposes other than eventual disposal. For example, btc is acquired for the dominant purpose of building up a diversified portfolio of property that the person will not necessarily realise, or as a long-term investment that the personal will not necessarily realise. In the situation where btc is not acquired for the purpose of ultimate dispo Continue reading >>

Ato Likely On Alert For Cryptocurrency Claims During Tax Time

Ato Likely On Alert For Cryptocurrency Claims During Tax Time

ATO likely on alert for cryptocurrency claims during tax time Depending on who's talking, cryptocurrencies are either the next big thing or the currency of the underworld. But an increasing number of chartered accountants say their clients are interested in the tax ramifications of investing in this latest barbecue stopper. Assistant Treasurer Michael Sukkar has said he's been informally working with people in Treasury and the ATO to characterise and potentially tax and treat cryptocurrencies. While some jurisdictions have taken a relatively dim view of cryptocurrency, as Mr Sukkar noted, others are working hard to strike the right balance between fostering blockchain technology which underpins cryptocurrencies, and safeguarding consumers, businesses and regulators. Take, for instance, the UK's Digital Currency Inquiry announced recently . The terms of reference cover many topics that reflect both sides. This is a clear reminder that cryptocurrencies have many backers in the fintech space. But I've yet to meet a tax official enamoured with the idea that deregulating and embracing new technology to streamline government should spawn new types of untaxed endeavour. Nonetheless, when it comes to tax and community confidence in the systems they administer, ATO commissioners know they must stay ahead of the curve, and their focus is simple: Come tax time, will those who've made cryptocurrency profits come forward and pay their tax? Tax regulators fear a hit to tax revenue from crypto-players claiming tax losses. This bitcoin USD chart suggests there may be plenty in this category. Currently there are no bespoke Australian tax rules other than the 2017 legislation to remove double-taxation for GST purposes . This means some long-established tax principles must be pressed int Continue reading >>

What's Missing In The Ird's Crypto Guidance

What's Missing In The Ird's Crypto Guidance

Whats missing in the IRDs crypto guidance Richard MacManus looks behind the IRD's guidance on cryptocurrencies and finds trading profits can be taxed, but uncertainty remains over how to tax the tools used by currency miners, traders and hoarders. The Inland Revenue Department has finally released its guidance oncryptocurrencies, months after its Australian counterpart did the same. No surprise, the upshot iscryptocurrencies will be treated like property for tax purposes. But the IRD has yet to give specific guidance on Initial Coin Offerings (ICOs), using utility tokens and whether currency users should pay GST. "Just like with property - when you acquire cryptocurrency for the purpose of selling or exchanging it, the proceeds you make from selling it are taxable," said Inland Revenue customer segment leader Tony Morris. What that means from a practical standpoint isyou will have to declare - and pay tax on - any profits you make trading cryptocurrency. I reached out to Deloitte Private partner Ian Fay, who specialises in tax, for comment. He notedthe IRD is not treating cryptocurrency as "currency"or a"financial arrangement," which means "if there's any tax that's going to arise, it's only going to arise when you dispose of a crypto asset." So in other words, if you simply hold - or "hodl" as they say in crypto circles - your virtual currencies, then any unrealised gains won't be subject to tax. In a Q&A on its website, the IRD clarifiedin most instances it will treat proceeds from the sale ofcryptocurrency as trading income, since "Bitcoin and similar cryptocurrencies generally dont produce an income stream or provide any benefits, except when theyre sold or exchanged." Perhaps the most surprising aspect of the IRD's announcement is you won't be able to escape your Continue reading >>

Ird May Treat Crypto-currencies Like Gold

Ird May Treat Crypto-currencies Like Gold

IRD may treat crypto-currencies like gold The Inland Revenue Department is working on guidelines for the tax treatment of crypto-currencies. It says they may treat it similar to the proceeds of gold bullion sales that had been held for profit. An IRD spokesman said preparatory work was "underway on issuing public guidance regarding the tax treatment of crypto-currencies". The department declined to comment on the implications for creditors of Bitcoinica, the Auckland-based currency trader put into liquidation in 2012, saying it was unable to comment because the liquidation of the offshore company that held much of its assets was on-going. The IRD spokesman referred BusinessDesk to a note the department issued on the treatment of proceeds from the sale of gold bullion. It said under the Income Tax Act, proceeds from the disposal of gold, as with any personal property, would in most instances be deemed income if acquired "for the dominant purpose of disposal". "In the case of gold bullion, the commissioner considers that this is particularly so, as bullion does not provide annual returns or income while it is held, nor does it confer other benefits," the note said. The taxpayer would be able to deduct costs such as the purchase cost and expenditure related to the acquisition such as foreign exchange charges, the note says, in an example of a gold and silver buyer. Bitcoinica's cash and bitcoin assets are held in accounts on the Mt Gox exchange in Japan, which was the world's largest bitcoin trading exchange when it collapsed in early 2014. Late last month the trustee said some Mt Gox creditors had filed a petition in the Tokyo District Court to begin civil rehabilitation proceedings. If successful it could open the door for creditors to recover their bitcoins at the prev Continue reading >>

Ird Has A Warning For Cryptocurrency Investors

Ird Has A Warning For Cryptocurrency Investors

IRD has a warning for cryptocurrency investors The Inland Revenue Department is reminding cryptocurrency investors of their tax obligations in new guidance released today. For tax purposes cryptocurrencies - essentially money that exists only in digital form - would be treated like property, Inland Revenue (IRD) said. Its customer segment leader Tony Morris said although trading in cryptocurrencies happened in a digital realm, tax obligations still applied in New Zealand. "Just like with property - when you acquire cryptocurrency for the purpose of selling or exchanging it, the proceeds you make from selling it are taxable," Morris said. "The purpose is hard to argue here since with Bitcoin and other cryptocurrencies, generally the only time they produce an income is when they change hands." Morris said IRD had put out the information in response to questions about tax responsibilities on its site. Bitcoin, Ethereum, Ripple and Litecoin are some of the well-known examples of cryptocurrencies. Such currencies were usually encrypted using Blockchain technology that regulated the generation of new units and verified fund transfers. It operated independently of any central bank and could be transferred without going through a bank. The IRD said tax was also applied when one cryptocurrency was swapped for another, reminding investors that they didn't need to change the currency to dollars for tax to be applied. Similarly if cryptocurrency was received as payment for goods or services, this was also considered income and was taxable. "It's important to keep good records of your transactions as this information will be useful when filing a tax return," Morris said. "Let Inland Revenue know if you think you haven't got your past tax returns right so that it can be corrected. " Continue reading >>

Questions & Answers: Cryptocurrency And Tax

Questions & Answers: Cryptocurrency And Tax

Adjust your income for Working for Families Tax Credits and student loans Questions & answers: Cryptocurrency and tax Inland Revenue is considering a range of issues related to cryptocurrency now. Well keep adding to this list as new information becomes available 1. Is cryptocurrency treated as a foreign currency for tax purposes? No. For tax purposes, cryptocurrency is property, not currency. This means foreign currency gain or loss provisions do not apply. 2. My business accepts cryptocurrency as payment for goods and services. Do I have to pay income tax on it? Yes. Cryptocurrency received as payment for goods or services is business income, which is taxable. This is seen as a barter transaction and youll need to calculate the value of the cryptocurrency in New Zealand Dollars (NZD) at the time its received. Find out more about business income tax . 3. I have received payment in cryptocurrency. How do I calculate the NZD equivalent? If your cryptocurrency receipt is not converted into New Zealand dollars (NZD) straight away by a cryptocurrency merchant processor, youll need to convert it to the NZD equivalent on the relevant date. Conversion rates used must be from a reputable exchange with a reasonable trading volume. For some alt coins (cryptocurrency other than Bitcoin) it may be necessary to convert into US dollars, or any other fiat currency , and then convert into NZD. Rates can vary significantly between different exchanges and currencies. You must use a consistent exchange and conversion approach. 4. I purchased some cryptocurrency a few years ago. Will there be a capital or revenue (taxable) gain when I sell it? It depends on your purpose for acquiring the cryptocurrency. Cryptocurrency is considered property for income tax purposes. Where you acquire crypt Continue reading >>

Setback To Bitcoin? Govt Sends Tax Notices To Cryptocurrency Investors; Trading Hits $3.5 Bn

Setback To Bitcoin? Govt Sends Tax Notices To Cryptocurrency Investors; Trading Hits $3.5 Bn

Setback to Bitcoin? Govt sends tax notices to cryptocurrency investors; trading hits $3.5 bn Business Reuters Jan 20, 2018 11:48:19 IST New Delhi: The government has sent tax notices to tens of thousands of people dealing in cryptocurrency after a nationwide survey showed more than $3.5 billion worth of transactions have been conducted over a 17-month period, the income tax department said. Tech-savvy young investors, real estate players and jewelers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine exchanges in Mumbai, Delhi, Bengaluru and Pune. Governments around the world are grappling with how to regulate cryptocurrency trading, and policymakers are expected to discuss the matter at a G20 summit in Argentina in March. The government has issued repeated warnings against digital currency investments, saying these were like 'Ponzi schemes' that offer unusually high returns to early investors. But it has not so far imposed curbs on an industry estimated to be adding 200,000 users in India every month. B R Balakrishnan, a director general of investigations at the income tax department in the southern state of Karnataka, said notices were sent following the survey to assess the penetration and patterns of virtual currency trade. We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality, he told Reuters. The tax department has asked people dealing in bitcoin and other virtual currencies such as ethereum and ripple to pay tax on capital gains. They have also asked for details about their total holdings and the source of funds in the tax notice seen by Reuters. We found that investors were not reflecting it on their tax returns and in many cases, Continue reading >>

Countries With 0% Tax On Bitcoin/cryptos: Tax Free Life

Countries With 0% Tax On Bitcoin/cryptos: Tax Free Life

Countries With 0% Tax On Bitcoin/Cryptos: Tax Free Life By: Sudhir Khatwani In: Cryptocurrency Last Updated: Lets talk about Bitcoin /crypto taxation today. I have seen many millennialsanxiously talking about tax-free crypto countries and taxation laws of their countries. These millennials, just like you and me, are also Bitcoin/crypto investors and HODL ers. <br /> Can't load widget<br /> In my opinion, Bitcoin/cryptos should not be taxed because we already buy cryptos with our hard-earned money which is already taxed in our respective countries. So I think after the original Capital Gains Tax, there should be no taxation, otherwise it will be like taxing the same money twice. Encouraged by this discussion, today I am doing this post to talk a little abouttax-free crypto countries. The first obvious question that might come to mind is: Are there any countries in the worldwhere Bitcoin/other cryptos are not taxed? And the answer to this is YES! There are! But some countries are really confused on whether to consider Bitcoin/cryptos as a commodity, currency, or an asset. So until that confusion gets resolved, Im going to talk about some tax haven countries for Bitcoin/cryptos that can benefit you. Note: There are all sorts of Bitcoin taxes in different countries (like GST, VAT, Service Tax, CGT (Capital Gains Tax), etc .) But in this article, we will talk only aboutCGT (Capital Gains Tax) because thats the only one that matters to end users or investors like us. In Germany, Bitcoin and other cryptos are not considered as a commodity, a stock, or any kind of currency. Instead, these things are considered as private moneyin a way thats similar to foreign currency. Trading bitcoins/altcoins are considered as a private sale under the rule 23 EStG Continue reading >>

Ird To Clamp Down On Crypto Currency Traders

Ird To Clamp Down On Crypto Currency Traders

IRD to clamp down on crypto currency traders Inland Revenue is clamping down on businesses and traders who use cryptocurrency, reminding them to be aware of the consequences of avoiding tax obligations. IRD customer segment leader Tony Morris said the organisation was working on ways to eliminate abuse of the system. "People who may be non-compliant ... are something we're looking at, and how we can improve the information we get and work closely with international authorities to work out how we can best do that." Digital currencies such as Bitcoin are viewed in a similar vein to mainstream currencies when it came to tax. This meant traders in cryptocurrency had to pay tax on any capital gain. Inland Revenue has been swamped with enquiries as to the tax status of cryptocurrencies and has responded by issuing an FAQ on its website . Countries such as South Korea and Thailand have created, or are in the process of creating, legislation to deals with cryptocurrencies. That option was on the table but some time away, Mr Morris said. "Tax rules are quite old. Things like cryptocurrency are quite new so it's not always an obvious answer." "It's still early days on the policy and legislative front ... we're looking at the whole policy settings around this and other things, so too early to say whether we would - but we're certainly looking at what might be needed going forward." Continue reading >>

Cash, Crypto And Crowdlending: Meet New Zealands Rising Fintech Future

Cash, Crypto And Crowdlending: Meet New Zealands Rising Fintech Future

Cash, crypto and crowdlending: meet New Zealands rising FinTech future From a platform that helps you lend support to theMori economy to a system that allows you to donate your transactions fees to charitable causes, this years cohort forthe second ever Kiwibank FinTech Accelerator promises big things for the future of the countrys financial system. Sharesies was built on a simple idea: to make investing more accessible for regular people to do. It officially launched with some tentative hype in June, but by the end of the year, it was boasting more than 7,500 users on its platform not bad for a company still in beta mode. Ultimately, a successful company is buoyed by the quality of its idea and the people behind it, which Sharesies has with Sonya Williams, Brooke Anderson and Leighton Roberts coming together to make an easy-to-use, visually-appealing product . But theres something else thats helped Sharesies to become the burgeoning startup it is today an accelerator. More specifically, Kiwibanks inaugural FinTech Accelerator held in early 2017. For those unfamiliar with the concept, the Kiwibank FinTech Accelerator is a three month business growth programme powered by Lightning Lab . Its an opportunity for startups working in the fintech sphere (security, lending and financial literacy, for example) to grow their business in a short time frame, with the end goal being that their success will help improve the countrys financial system. Sharesies has gone on to become the programmes highest-profile success story from last year, and with the accelerator returning for the second time around, this years cohort is keen to follow in Sharesies footsteps. For three months, theyll prep and prime their business ideas for the all-important demo day in May where theyll pitch to a Continue reading >>

Are Bitcoin And Cryptocurrency Gains Taxable Income?

Are Bitcoin And Cryptocurrency Gains Taxable Income?

Are bitcoin and cryptocurrency gains taxable income? With increased investment activity in bitcoin (btc) and cryptocurrency, its important to consider any tax consequences that may arise. Outlined below are the tax consequences for probably the most common situation we see; btc purchased for long term growth. If you acquire btc for the purpose of disposal, IRD default position is that any gain or loss will be taxable income. This is their default starting position because btc is normally acquire for the dominant purpose of disposal. Unlike alternative investments (such as shares or bonds, or other personal property), btc is a non-income producing asset and does not provide any benefit when being held. Therefore, the nature of btc strongly indicates that it was acquired for the dominant purpose of ultimately disposing of it; otherwise why would you buy it? There may be some circumstances where IRD may accept that btc has was acquired for purposes other than eventual disposal. For example, btc is acquired for the dominant purpose of building up a diversified portfolio of property that the person will not necessarily realise, or as a long-term investment that the personal will not necessarily realise. In the situation where btc is not acquired for the purpose of ultimate disposal it would need to be supported by clear and completing evidence. In other situations of acquiring non-income producing assets (such as gold), IRD have stated that merely describing the property or the reason it was acquired will not answer the question of whether the was a dominant purpose of disposal. For example, describing btc as being acquired for a long-term investment, a hedge against inflation, for portfolio diversification, or as a store of value outside the monetary system is not sufficie Continue reading >>

Should Bitcoin Owners Pay Tax On The Cryptocurrency?

Should Bitcoin Owners Pay Tax On The Cryptocurrency?

Should bitcoin owners pay tax on the cryptocurrency? Bitcoin is trading for about US$15,186. Picture / 123RF Ian Fay is a tax partner at Deloitte New Zealand So you were mostly nice last year. And for your efforts keeping all those naughty impulses at bay over the last 365 days, you woke up on Christmas morning to find Santa had rewarded you with a bitcoin in your stocking. You want to do the right thing because of course you want another reward from Santa this year so should you be worried about tax a bill for your bitcoin? If you don't know, you are not alone, as even Inland Revenue hasn't yet provided any guidance on how the tax rules apply to cryptocurrencies, although we understand they are working on it. Bitcoin is currently experiencing explosive growth in value - and hype. This naturally raises questions of how revenue authorities should be taxing cryptocurrencies generally. In terms of background, a cryptocurrency is a digital "currency" in which encryption techniques are used to regulate the generation of units and verify the transfer of ownership, operating independently of a central bank. When you buy cryptocurrency it is held in a 'digital wallet', and can then be used to buy goods or services from anyone willing to accept it. Cryptocurrencies can be bought and sold on cryptocurrency exchanges, and you won't actually find one in your Christmas stocking, since they're all just lines of code. In terms of legal status, the Financial Markets Authority considers that cryptocurrencies are not legal tender (and this is the same around the world). Rather, most cryptocurrencies are intrinsic tokens, that is they are not pegged to a dollar or paying any sort of dividend. The correct tax treatment will depend on the characteristics of the currency. The most likely is Continue reading >>

If You Find A Bitcoin Under The Christmas Tree, Should You Be Worried About A Tax Bill?

If You Find A Bitcoin Under The Christmas Tree, Should You Be Worried About A Tax Bill?

If you find a Bitcoin under the Christmas tree, should you be worried about a tax bill? If you found a bitcoin under the Christmas tree, should you be worried about tax a bill? If you dont know, you are not alone, as even Inland Revenue hasnt yet provided any guidance on how the tax rules apply to cryptocurrencies, although we understand they are working on it and expect to publish a Q&A shortly. Bitcoin experienced explosive growth in value in the period leading up to Christmas followed by a quick and large loss of value (almost two thirds) in the early part of 2018, and this naturally raises questions of how revenue authorities should be taxing cryptocurrencies generally. A cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units and verify the transfer of ownership, operating independently of a central bank. When you buy cryptocurrency it is held in a digital wallet, and can then be used to buy goods or services from anyone willing to accept it. Cryptocurrencies can be bought and sold on cryptocurrency exchanges (and you wont actually find one under the Christmas tree, since theyre all just lines of code). In terms of legal status, the Financial Markets Authority considers that cryptocurrencies are not legal tender (and this is the same around the world). Rather, most cryptocurrencies are intrinsic tokens (i.e. they are not pegged to a dollar or paying any sort of dividend). The correct tax treatment will depend on the characteristics of the currency. The most likely is that they would be treated as property, which means that any gains (or losses) on sale would be taxable (or deductible) again, this isnt certain, as the rules on property sales depend on the reason the property was acquired. Inland Revenue have Continue reading >>

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