Blockchain technology has changed the world – the demand for cryptocurrencies is rapidly increasing globally. Their status varies depending on the region: some governments prohibit crypto usage, while others accept it but provide appropriate taxation systems.Â
New Zealand is in the second category. Cryptocurrencies are legal in the country; moreover, it’s widely common in the financial sector. Users must pay taxes for crypto transactions, so it’s essential to consider all the details before using the decentralized system.
Taxation on Cryptocurrency Transactions In New Zealand
New Zealand’s progressive taxation system on cryptocurrency transactions means that the tax rate applied depends on the taxpayer’s income. This system, which does not impose fixed sums, is particularly advantageous given the volatility of the crypto market.
Most cryptocurrency services, including selling, trading, mining, earning interest, and providing gifts in Bitcoin, are taxable events. Users must recognize their profits from cryptocurrencies, which will then be taxed. Losses from crypto selling can reduce the taxable amount.
However, it’s crucial to understand the specific requirements for crypto tax filing in New Zealand. Taxpayers must accurately report their cryptocurrency transactions and income to the Inland Revenue Department (IRD).
The filing process involves declaring all taxable crypto-related activities within the tax year, calculating the income or losses from these transactions, and reporting the net result on their tax return. This ensures that the final tax liability reflects the total income, grouped and taxed at the applicable rate, regardless of the source of crypto profits.
Legal Aspects Of Using Cryptocurrency In Online Casinos
Gambling is legal and widespread in New Zealand, but its legislation has numerous peculiarities. While land-based gaming establishments are legal and available for all people over 18, NZ-based online casinos are completely banned.Â
However, it doesn’t mean that risk fans cannot enjoy virtual gambling, as overseas operators can enter the country’s market. Various gambling operators and almost any casino for NZ customers offer a variety of payment methods, and cryptocurrencies are among them.
Players prefer smooth, quick, and anonymous deposits and withdrawals when gambling. In this case, Bitcoin, Ethereum, Dogecoin, and their alternatives are the top solution. Experts predict that the crypto gambling market value will reach $93 billion by the end of 2023. Such statistics confirm the popularity of this banking option among players and bettors.
Winnings from online casinos are not taxable in New Zealand, as only offshore operators are allowed in the country. However, the crypto income still implies taxes. Therefore, users withdrawing their money prizes via cryptocurrencies will have to pay a percentage of their winnings, depending on the final income.Â
The taxation system is equal for everyone, so consider all its aspects before engaging in online gambling in New Zealand.
Also Read: Crypto Casinos: A Decentralized Take on Online Gambling
Procuring Cryptocurrency in New Zealand
Buying crypto is allowed in the country, and many residents actively use this opportunity. Recently, the Finance and Expenditure Committee of New Zealand has prepared a report for cryptocurrency inquiry. It focuses on recommending and advising the government to prepare for regulatory policies and find a legal stance on cryptocurrencies.
In 2021, 9% of the entire NZ population reported interaction with the decentralized financial system. There are no relevant statistics for 2023 yet, but we can suppose that the number of crypto users has increased.Â
The market volatility during the last few years hasn’t prevented users from purchasing cryptocurrencies and proceeding with varied transactions.
Currently, the decentralized financial system can be used in multiple industries and is among the most reliable payment options. Moreover, many people still prefer to store their assets in cryptocurrencies, considering them less susceptible to crises and fraud.
Purchasing crypto assets is not taxable in New Zealand, as the government only considers income. However, remember that the assets’ value can grow due to market fluctuations. A person can store their cryptocurrencies without trading or selling them, but their actual value can still grow. In this case, a user will have to pay taxes depending on their profits.
Crypto as Income in NZ
The NZ crypto taxation system is pretty understandable even for those just beginning their way in a decentralized financial system. Purchasing, selling, and trading crypto assets is legal in the country. There are multiple ways to profit from these processes, but it’s important to learn the taxation system and know what awaits you.Â
All crypto income requires users to pay fees – but the final tax percentage depends on the revenue size. Remember that the government imposes penalties for users ignoring their obligation to pay crypto taxes. The Inland Revenue Department thoroughly monitors all tax declarations and has the right to investigate cases when people don’t report their income.Â
Violations can lead to a 150% fine of up to $50,000. Moreover, if the taxpayer knowingly provided false information, they may face up to 5 years in prison. Since New Zealand has a fairly flexible tax system, studying everything in advance and submitting a truthful report on cryptocurrency income on time is the best solution.
Income Tax Rates in New Zealand
Normal tax rates are implemented when counting the necessary payments in New Zealand. It varies from 10.9% to 39%. The final sum depends on the users’ revenue. The 10.5% tax rate is imposed for a profit under $14,000, 17.5% for sums up to $48,000, 30% for income up to $70,000, and 33% when earnings get up to $180.Â
Finally, those whose profits exceeded $180,000 should pay 39%. However, remember that the tax is counted on the sum a user has earned. Therefore, if you have invested $2,000 in buying crypto and made $300, 10.9% will be counted from $300, not $1,300.
Final Insight
Cryptocurrencies are becoming more widespread, even despite market fluctuations. The number of people interacting with the decentralized financial system is growing both in New Zealand and globally. Therefore, the country’s government had to initiate special crypto regulations for users.Â
Kiwis have a progressive system, where the final tax amount depends on income. It’s beneficial for traders and those selling crypto since they can pay lower sums in case of losses.
Crypto users should be attentive to all the legislation’s peculiarities: for instance, this payment method is actively utilized in online gambling according to gambling crypto regulations in New Zealand.Â
Even though profits from online casinos are not taxable, players must pay if they receive their cash prizes in cryptocurrencies. Learn everything in advance to avoid misconceptions and penalties!
