Most cryptocurrency clients made a profit in the 2021 financial year and will have 2021 terminal tax to pay on 7 April 2022.
If the tax amount is more than $5,000, they will also have 2022 provisional tax to pay on 7 May 2022, calculated as 105% of the 2021 tax amount.
Understanding 2022 provisional tax is important because:
- No one wants to pay more tax than what they have to.
- You want to meet your IRD obligations and prevent expensive IRD late payment penalties or use of money interest.
- You need to have a plan on how you will fund your tax payments and when they are due
- You need to understand why you have provisional tax to pay and what it is
- You can change your strategy to prevent having provisional tax in the first place or approach your activity more strategically.
This video provides education and example, about what is provisional tax, how it is calculated and provides you with options to consider, as the due dates approach.
We are accountants and not financial advisors. We cannot provide you with financial advice on what you should do (regarding paying the tax, investing the tax money, or deferring tax payments – all as outlined in the video). Cryptocurrency has significant risk and volatility which needs to be considered when making decisions. Everyone will be different.
Contact us for a call or meeting to discuss any cryptocurrency tax or accounting questions. Our office is in Cambridge, Waikato, or we can arrange a video conference call.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.