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New guidance on Cryptocurrency from IRD
09 Apr 2018

The IRD has just issued some new guidance on cyrptocurrency here (end of March, 2018).  It is interesting to think about traditional Government and how it responds to something new like blockchain and its currently most well known child, cryptocurrency.  The key takeaways are the following points they make which for the first time make clear the regulatory environment that they are wanting people to be operating within (these are direct quotes from their Q&A statement):

The IRD had issued some previous guidance before but some of the points here had not been clear.  This guidance indicates that in New Zealand they want to be capturing the value created from the ownership of any cryptocurrency.  Doing that may involve some hurdles to calculate what those values actually will be in New Zealand dollars to report on (eg on a sale calculate Alt coin value -> USD value -> NZD value -> pay tax on that).

The other interesting aspect is if you are receiving payment for goods and services that is to be treated as taxable business income.  What are the flow on impacts of such a regulatory environment in terms of impact on small players who are planning to use a cryptocurrency for small scale projects and as a way to transfer value for someone providing a service, or someone selling some goods.  On an initial reflection about this it means, for example, if I grow organic vegetables in my back garden and receive cryptocurrency in exchange for them from a third party that when I sell them like that then that cryptocurrency is business income that I need to pay tax on.  It adds a layer of complexity perhaps once a regulatory body like the IRD gets involved in what could have been a seamless exchange of cryptocurrency for the exchange of goods or services.  It will be important to keep an eye out and watch how this all develops.

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