In recent months, we have had many difficult conversations with cryptocurrency clients about their tax liability for the 2022 financial year (from 1 April 2021 to 31 March 2022). Many of our clients made significant profits in the 2022 financial…
Category: Cryptocurrency Tax
Tax Position on Sacrificing Tokens to Pulse Chain
Some clients have sacrificed HEX tokens with the intention to receive PULSE tokens once they are released. This article considers the tax position and the current application of the income tax legislation, draft IRD guidelines on DEFI protocols, and our…
DEFI Disposal & Acquisition Concepts
I recently presented at the Chartered Accountants Australia New Zealand (CAANZ) tax conference in Christchurch about cryptocurrency tax. The presentation included disposal and acquisition concepts of cryptocurrency DEFI tax which are outlined in this article. Some cryptocurrency investors will not…
Claiming Tax Losses From Cryptocurrency
Due to the market collapse in 2023, currently, we expect many clients will have losses from cryptocurrency. This may be compounded further because of the bankruptcy of FTX, Celsius, and BlockFi and not to mention TERA and LUNA situation. What…
Implications of Cryptocurrency as Excepted Financial Arrangements
In March 2022, IRD released a new bill that classifies cryptocurrency as excepted financial arrangements (EFA). This was the same bill that removed GST from most cryptocurrencies and is retrospectively applied to 1 January 2009. The classification of cryptocurrencies as…
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Accounting for Celsius Losses
Celsius is a cryptocurrency lending company. The primary service offered was a staking service. Users could deposit cryptocurrency into a Celsius wallet and earn a yield on the deposit (similar to a bank offering a term deposit). Celsius also offered…
IRD Guidance on Airdrops
This month, IRD finally published guidance regarding the taxable treatment of airdrops. What is an airdrop? An airdrop is a distribution of tokens without compensation (i.e., for free), generally with a view to increasing awareness of a new token, particularly…
2023 Provisional Tax – due 28 August 2022
This article is about the first instalment of 2023 provisional tax due to the IRD on 28 August 2022. This tax payment is calculated based on the 2021 tax amount plus 10% or the 2022 tax amount plus 5%. If…
Bulletproofing Your Cryptocurrency Record Keeping
Cryptocurrency trading can be like an emotional rollercoaster. When we present financial statements to clients, they are surprised to see their trading volume. It’s nearly always higher than they expected. They have transacted with cryptocurrency going back and forth, in…
Hidden Complexities of Buying Cryptocurrency for Someone Else
Sometimes, people might buy cryptocurrency on behalf of another. A friend or family member may say, "Hey, here's $10,000. Can you get me some too?" At the time, it doesn't seem like a big deal. But come tax time, it…
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