Navigating the Crypto Tax Maze: A Guide for New Zealand Small Business Owners

Crypto is becoming more common in investment portfolios, but the tax rules can feel confusing. In New Zealand, there’s no special “crypto tax” — instead, normal income tax rules apply. The key question is: when do your crypto activities create taxable income?

When Crypto Profits Are Taxable

Whether you need to pay tax depends on your purpose and activities. Since crypto is treated as property (not currency), most gains are taxable if you’re buying with the aim of selling later.

Here are the most common situations where tax applies:

• Running a business in crypto
  If you trade crypto regularly (like a dealer or exchange), your profits are treated as business income and taxable.

• Buying crypto to sell later
  If your main reason for buying was to sell or swap for a profit, any gains are taxable. This covers most active traders and many investors.

• Profit-making plans
  If your crypto activity is part of a wider plan to make money, gains will likely be taxed.

• Using crypto in your business
  If you accept crypto as payment or use it in your normal business activities, it’s treated the same as any other income.

What counts as “disposing” of crypto?
It’s not just selling for NZ dollars. You also trigger a taxable event when you:

• Swap one crypto for another (e.g. Bitcoin → Ethereum)

• Use crypto to pay for goods or services

• Gift crypto to someone (in some cases)

Special Events: Airdrops & Hard Forks

Crypto has some unique events that create new tokens. Here’s how they’re usually treated in NZ:

• Airdrops (free tokens given out to raise awareness or reward users)

  • Usually not taxable when you receive them, unless you’re in business or providing services to get them.

  • If you later sell those tokens, any profit is taxable.

• Hard Forks (when a blockchain splits and creates a new coin, e.g. Bitcoin → Bitcoin Cash)

  • Receiving new coins from a fork is generally not taxable straight away.

  • When you sell the new coins, the full amount you get is usually taxable (because they cost you nothing to acquire).

How to Work Out Taxable Income

If your crypto is taxable, your gain (or loss) is worked out as:

Sale value (in NZD) – Purchase cost (in NZD) = Taxable profit or loss

A few key points:

• You must record values in New Zealand dollars at the time of each transaction.

• If you were taxed on receiving a coin (like some airdrops), that value becomes its “cost” when you later sell.

• Losses can usually be claimed against your other taxable income, as long as the activity itself is taxable.

The Golden Rule: Keep Records

Because crypto moves fast and often involves lots of small transactions, keeping records is vital. For every transaction, note down:

• Date and time

• Type of crypto and how much

• Value in NZD at the time

• What the transaction was for (investment, payment, etc.)

• Wallet addresses and transaction IDs

You can pull reports from your Cyrpto portfolio manager to help us determine your gains and therefore profit that you must pay tax on.

Want help with your tax obligations?

This isn’t our area of expertise, but we can refer you to some cyrpto experts to get you sorted.