Updated for 2025

The Ultimate Guide to NZ Crypto Tax

Cryptocurrency is no longer a niche investment quietly operating outside the system. If you've ever traded, mined, or earned any crypto, this might be the most helpful thing you read today.

You may have received a letter such as "Inland Revenue is reviewing cryptoasset activity" or "Declare your crypto asset income now to avoid being audited"

Josh Hawkey - Tax Hawk

Josh Hawkey

Tax Hawk

Matt Shallcrass - Baker Tilly

Matt Shallcrass

Optimaca NZ

This guide will serve as your roadmap to understanding crypto tax in New Zealand:

  • •Why crypto is taxable under NZ tax law
  • •What counts as a taxable event (and what doesn't)
  • •How to calculate your tax liability
  • •What records you're required to keep
  • •What needs to be filed, and when
  • •Common misconceptions (including the myth that crypto is anonymous and untraceable)

By the end of this guide, you'll know how to stay on the right side of the IRD and how to legally minimise tax while doing so.

TL;DR

1
Crypto is taxable in NZ: IRD treats most crypto gains as taxable.
2
Disposals are key: Selling, swapping, spending, gifting, or burning crypto are taxable events, even if you never cashed out to fiat. Simply holding crypto is not.
3
Track everything: Every wallet, token, and transaction needs a full audit trail. Missing data often leads to overpaying tax.
4
Use tax software: Tools like Koinly and CryptoTaxCalculator help automate tracking, cost base calculations, and tax reporting.
5
Losses are deductible: Crypto losses can offset other income which can lead to a refund or be carried forward to reduce future taxable gains.
6
Provisional tax applies: Once your residual tax > $5,000, you must prepay tax for the following year in instalments.
7
IRD is watching: They're collecting data from exchanges and sending letters. Crypto is traceable and enforceable.
8
Legal ways to reduce tax: Hold long-term, offset losses, claim deductions (like accounting fees, software, and wallets), and structure smartly.
9
Complex? Get help: If you've used DeFi, NFTs, leverage, or have thousands of transactions, talk to a crypto tax specialist such as TaxHawk

2. Types of Taxable Crypto Transactions

Not all crypto activity is taxed the same, but most transactions have tax consequences.The key concept is "disposal." If you sell, swap, spend, gift, or otherwise part with your crypto, there's a good chance you've triggered a taxable event under New Zealand tax law.

What Is a "Taxable Event"?

If you've sold, transferred, traded or disposed of any crypto for another, this creates a taxable event. The taxable amount is the difference between the value when you bought the token and when you disposed of it.

Common taxable events include:

  • •Selling crypto for NZD (or another currency)
  • •Swapping one crypto asset for another (e.g. BTC to ETH)
  • •Using crypto to pay for goods or services (e.g. through Wirex)
  • •Gifting crypto to another party
  • •Receiving crypto from mining, staking, or airdrops
  • •Earning crypto as an income (e.g. via freelance work or selling NFTs)

This means even if you haven't actually cashed anything out to FIAT, you may more than likely have taxable events and therefore taxable income (or loss).

What's Not Taxable

Buying and holding your crypto without selling, swapping, or spending it doesn't create a taxable event. You're only taxed when you dispose of the asset later on.

Calculations

All transactions and calculations must be done in base NZD currency, which means there is always movement between NZD and USD, USD and Tokens, and Tokens and NFTs. This means even if you buy and sell the same NFT for the same amount, the chances are it will have a slightly different NZD cost base due to the above.

Buying, Selling, Trading Crypto

Buying crypto and later selling it for currency is a common taxable event. Any profit you make is considered taxable income.

Example:

You buy 1 BTC for $100,000 NZD. Later, you sell 0.2 BTC when Bitcoin is worth $120,000 NZD.

The gain: $4,000 NZD (0.2 BTC × $20,000 NZD increase).

Swapping Crypto

When you swap one token for another, such as BTC to ETH, you're disposing of the first token and acquiring the second. Regardless of the token involved, tax law treats swaps as if you sold one and bought another.

Each swap is a taxable event. It must be reported whether it's BTC to ETH, ETH to USDT, or even BTC to WBTC.

If you execute a multi-step trade, such as converting BTC to USDT and then USDT to NZD, each step is considered a separate taxable event. Both disposals must be recorded and calculated, even if the second trade results in only a small fx gain or loss.

Moving Crypto

Moving the same token between wallets you control isn't considered a disposal and isn't taxable.

In most Crypto tax software, this is considered a 'transfer'. It is essential to ensure that you load all your wallets and exchanges into your software, as missing a wallet can cause the software to assume a disposal and acquisition, potentially inflating your taxable income.

Using Crypto to Pay for Goods or Services

Spending crypto is considered a disposal. If you use a crypto debit card or send tokens directly to a vendor, the transaction is considered a taxable event.

For example, if you spend $100 worth of ETH at the supermarket, you dispose of that ETH. Your taxable gain or loss is based on the difference between what you paid for it and its value at the time of the transaction.

Staking Rewards

Income from staking

Staking is treated very similarly to bank interest. This is assessed based on the NZD value when the tokens are received.

Even if you hold onto those tokens, receiving them is treated as income, separate from any future disposal. You'll need to declare the value as income when earned, and later calculate any gain or loss when you eventually sell or swap the tokens (unless your dominant purpose for this token is staking)

Airdrops

Not all airdrops are taxed the same way.

If free tokens just land in your wallet with no effort, you're usually not taxed right away. You'll only pay tax when you eventually sell or use them.

But if you had to do something like buy a token, stake, or register for a program, then the airdrop counts as income when you receive it.

If, based on your trading activity, you are considered a 'trader', airdrops would be considered business income, regardless of intent. This would likely be the case for most people who received the HYPE airdrop.

Mining Crypto

If you mine crypto, your earnings are taxable as soon as you earn them. The income is based on the tokens' worth in NZD, the moment they hit your wallet.

If you mine frequently or in a structured way, it's often considered business income. Even casual or "hobby" mining is typically taxed, given the commercial accessibility of mining today.

NFTs: Minting, Trading, and Royalties

NFTs are taxed at multiple stages. When you mint an NFT, you're using crypto to do so. This counts as a disposal of the crypto, and is therefore taxable. This also sets the cost basis for this NFT.

Selling an NFT is also considered a disposal. Even if you buy and sell NFTs using the same crypto, each transaction is taxed based on the NZD value at the time. Converting that crypto back to NZD is, again, considered a disposal. Any gains or losses must be reported.

Ongoing royalty income from secondary market activity is classified as income and taxed accordingly.

DeFi

Decentralised Finance (DeFi) is one of the more complex areas of crypto taxation. Inland Revenue currently has very little guidance, but we understand they are in the process of issuing guidance shortly.

As a general rule, the conservative position is to treat DeFi activity as taxable.

Even when DeFi actions themselves are ambiguous, most users still trigger taxable events elsewhere—so in practice, the tax impact often ends up being the same.

If you've only interacted with Defi protocols to borrow against your collateral and you have significant unrealised positions for tax purposes, I would strongly suggest speaking to a tax lawyer or accountant who specialises in crypto or consider applying for a Private Ruling from IRD.

Why DeFi Is So Complex

DeFi transactions often blur the line between ownership, custody, and value. When you interact with DeFi protocols, you might be:

  • •Lending tokens to a pool
  • •Providing liquidity on a decentralised exchange
  • •Wrapping tokens
  • •Receiving LP tokens or staking derivatives
  • •Farming rewards or incentives
  • •Taking on leveraged positions

Each of these actions can potentially trigger a disposal, even if you don't receive fiat or a completely different token.

For instance, when you deposit WBTC into Aave, you receive a token like aWBTC in return. This could be considered a disposal of your original WBTC as you no longer hold it, even though you have the aWBTC receipt to redeem it later.

Any interest or rewards earned through DeFi are generally taxable income at the time they're received. When you later withdraw your funds or exchange the new token, you may trigger another taxable event.

Tracking Is Essential

Because DeFi often involves automated, complex, and multi-step transactions, tracking your tax obligations can become a real challenge without solid records. Using tools like Koinly or CryptoTaxCalculator can help with this. It is also wise to manually keep track of Defi positions because, as the ownership lines are blurred, once tokens are sent to a pool, the software no longer keeps track of them.

3. The Importance of Tracking Your Crypto from Day One

In New Zealand, crypto tax is based on your profit, which is the difference between what you sold the asset for and what you originally paid. That's why accurate recordkeeping from day one is essential. If your records are incomplete or incorrect, you risk potentially overstating your income and overpaying your taxes.

FIFO vs WAC: Tracking Your Cost Base

The IRD allows two main methods to calculate the cost base of your crypto assets:

FIFO (First In, First Out)

Assumes the oldest assets are sold first. This method tends to be the default for frequent traders but can be complex to apply manually in a spreadsheet.

WAC (Weighted Average Cost)

Averages all acquisitions to produce a single cost base for each asset. It's simpler, but may be less precise with high trading volume.

Regardless of the method you choose, it must be applied consistently across your entire portfolio for each asset type.

Your cost base is essentially how much you have paid for the tokens you hold. The difference between your cost base and the market value of your tokens is your unrealised gains.

How Gains Are Calculated

Every time you dispose of crypto, whether by selling, swapping, or spending, you calculate your taxable gain using this basic formula:

Gain = Disposal Value less Cost Base

Example:

If you bought 1 BTC for $100,000 NZD and later sold 0.2 BTC when the price had risen to $120,000, your taxable income would be:

0.2 × ($120,000 − $100,000) = $4,000

To calculate this accurately, you'll need to know when you acquired the asset, what you paid in NZD (i.e. the cost base), and its value at the time of disposal (i.e. the current market value). At this point, you are realising a portion of your unrealised gains.

Why Every Wallet Matters

Inland Revenue expects you to keep detailed records for every wallet, exchange, token, and transaction, including the NZD value at the time of each event.

For each transaction, you should record:

  • •Wallet address (especially for non-custodial wallets like MetaMask or Ledger)
  • •Exchange or platform used
  • •Transaction ID or hash
  • •Date and time
  • •Token quantity
  • •NZD value at the time

Even transfers between your wallets must be tracked. While not taxable, clear documentation helps demonstrate they weren't disposals.

If you don't start tracking from day one, you will likely have a missing or incorrect cost base, which means if a cost base of zero is assumed, you will definitely be overpaying tax.

What about missing records?

To the extent that records are unavailable (due to exchanges going bust or losing access to your account), this basically leaves a hole in your records where you won't be able to see both sides of the transaction.

If there are only a small number of missing transactions, it may be possible to retrace these by looking at transactions going to/from that exchange. Where this is not possible, the default position is to treat these as disposals and acquisitions coming to/from the wallets/exchanges you still have.

To the extent that no tokens were lost, overall it usually won't make a difference to your overall position, but may have a timing difference.

Use Software Tools

With thousands of tokens, multiple blockchains, and countless transaction types, manual tracking just isn't practical. It's not only time-consuming, it's risky. A missed trade or misclassified transaction could lead to incorrect tax reporting, especially if you're active in trading or DeFi.

The two main software used in New Zealand are:

Koinly

Good for high volume, although it can be expensive as you need to pay for each financial year needed

CryptoTaxCalculator

More user-friendly, but the interface can struggle with high volumes. You pay for each 365-day period that you use the software, rather than per financial year, so it can be cheaper when preparing multiple years at once

Most tools let you import transaction history for free so you only pay when it's time to generate a report. Many crypto accountants also have access to discounted plans, so talk to your advisor before subscribing.

4. Filing Your Crypto Tax

Once your transactions are tracked and your gains calculated, the final step is filing. In this section, we'll cover how to report your crypto income to Inland Revenue, where it fits in your tax return, and what records you need to keep in case of review or audit.

What Tax Year Are We Talking About?

New Zealand's standard tax year runs from 1 April to 31 March. For example, the 2025 tax year covers 1 April 2024 to 31 March 2025. If you're not working with a tax agent, your return is due by 7 July 2025. If you are linked to a tax agent, you may be eligible for an extension to 31 March 2026.

The actual tax payment is due 07 Feb 2026 or 07 Apr 2026 if you have an extension. This is called your terminal tax date.This also gets complicated by the provisional tax, which is explained below.

How to File Using myIR

Filing your crypto tax return is done online through the IRD's myIR portal. Here's how:

  1. 1Log in to your myIR account.
  2. 2Navigate to the "Income tax" section.
  3. 3Select "File return."
  4. 4Include a total summary of your crypto gains and income.
  5. 5Enter that amount into the appropriate box based on the nature of your activity.

Where to Declare Crypto Income

For most crypto income, this is included in the box "Other income (such as property sales, cash payments, sale of shares, etc.)".

If you're actively trading crypto or running it as a business, you'll need to report that income as self-employed business income. You'll also have to complete an IR10 or attach your financial statements. If you're trading through a company, you instead file a company tax return.

It may feel ironic, but after processing thousands of individual transactions, you may only be entering a single total amount into your tax return. However, that one number needs to be backed by your supporting documentation. You don't need to upload any additional documents when filing, but IRD expects you to keep complete records, as they may ask for them later.

This includes:

  • •A complete transaction history across all wallets and exchanges
  • •The NZD cost base for each token disposed of and the value in NZD at the time of each disposal
  • •A list of all wallet addresses used during the year
  • •Wallet and exchange account balances at year-end
  • •A summary report from a crypto tax platform (like Koinly or CryptoTaxCalculator)
  • •A breakdown of your income by type (disposals, staking, airdrops, royalties, etc.)

5. How Is Crypto Income Taxed?

Crypto gains are taxed as ordinary income, based on New Zealand's marginal personal tax rates. As there was an adjustment to the income bands during the 2024-25 tax year, the bands are a little more complicated than usual. Inland Revenue will automatically calculate this for you. The table is just for reference purposes.

NZ Personal Tax Rates

Income RangeTax Rate
Up to $14,00010.50%
$14,001 - $15,60012.82%
$15,601 - $48,00017.50%
$48,001 - $53,50021.64%
$53,501 - $70,00030.00%
$70,001 - $78,10030.99%
$78,101 - $180,00033.00%
$180,001 and over39.00%

Crypto income is added to any salary, wages, investment returns, or business profits you earn. For example, earning $80,000 in salary and making $30,000 from crypto gains will tax that additional income at the 33% marginal rate.

Provisional Tax: A Hidden Trap for Crypto Investors

Once your Residual Income Tax (RIT) (i.e. tax to pay less tax credits) goes over $5,000, Inland Revenue considers you a provisional taxpayer. This means you'll then need to make tax payments throughout the following year in instalments rather than settle everything at year-end.

Standard Uplift

This can often catch crypto investors off guard. At a 33% tax rate, it only takes $15,000 in untaxed crypto income to exceed the $5,000 RIT threshold. Assuming for the year ended 31 Mar 2025, you had $15k of income and had a $5k RIT, under standard uplift, it will be assumed that for the year ended 31 Mar 2026, you will have 5% more income, so the payments are calculated as follows:

$5,000 x 105% = $5,250 / three instalments = $1,750 due at:

  • • P1 - 28 Aug 2025
  • • P2 - 15 Jan 2026
  • • P3 - 7 May 2026

If it turns out that your RIT was $5,250, you will owe no further tax. If you made a loss, this provisional tax will be refundable, and if your RIT was more than $5,250, you will have a further balance payable. Given the volatility of crypto, it is highly likely that you will be in a profit one year and a loss another.

If you know for a fact you will be making more or less than the uplift amounts, you can choose to estimate your provisional tax to the correct amount. However, if you understate this, you are liable for interest on the shortfall.

Safe Harbour

If your RIT exceeds $60,000 ($150-$180k ish of income), you're no longer eligible for safe-harbour rules on use of money interest. What this means is IRD expects you to have already paid the tax in instalments during the year, and any shortfall on these payments can have interest charged.

If you suddenly jump from $15k of income to $500k of income, you will need to make a top-up payment before 7 May 2026; otherwise, shortfall interest will be charged from this date.

To avoid being in this position, I would strongly suggest calculating a draft tax position by 07 May 2026 so you roughly know what the tax amount is going to look like.

Worked Example

Let's say you have a $100k salaried job, you held two Bitcoins and sold them, realising a profit of $180,000 on 31 Mar 2025 and filed your tax return on 07 July 2025. This results in:

  • •A 2025 tax bill of $65,400 ($80k x 33% + $100k x 39%) due 07 Feb 2026
  • •A requirement to have paid provisional tax for the 2025 year, and falling outside of the safe harbour, meaning that interest is accruing on the $65,400 from 07 May 2025
  • •The first provisional tax payment of $22,890 ($65,400 x 1.05 / 3) is due 28 Aug 2025.

Interest and Penalties

Inland Revenue has the ability to charge a range of interest and penalties if you underpay or pay late.

  • •Use-of-money interest (UOMI): Currently 9.89% per annum on underpaid tax
  • •Late payment penalties: 1% the day after the due date, plus 4% seven days later
  • •Shortfall penalties: These range from 20% to 150%, depending on whether the underpayment was due to an honest mistake, gross carelessness, or deliberate evasion

Managing the Pain: Tax Pooling

If you find yourself in a position where you have underpaid tax, tax pooling may help reduce the interest and penalties. The leading providers for this are TaxTraders, TMNZ and Tax Pooling Solutions.

Tax pooling essentially lets you:

  • •Purchase backdated tax payments that are treated by Inland Revenue as if you actually paid them on time, therefore removing any interest or penalties
  • •Instead pay a set amount of interest to the pool, which is at a lower rate than the Inland Revenue

You can also use Tax Pooling to defer your tax payments up to 75 days past the terminal tax date (i.e. for the year ended 31 Mar 2024, this would be 21 June 2025, and for 31 Mar 2026, it would be 21 June 2026). Tax Pooling can also be used in certain circumstances when a voluntary disclosure is approved.

Voluntary Disclosures: Clean Slate Opportunity

If after reading this guide, you've realised you likely have tax obligations going back many years, making a voluntary disclosure can significantly reduce your exposure. If you've received a letter from Inland Revenue such as "Inland Revenue is reviewing cryptoasset activity" or "Declare your crypto asset income now to avoid being audited" a voluntary disclosure is the standard response.

By coming forward before IRD initiates an investigation, you may:

You'll still be liable for the core tax and some interest. Still, voluntary disclosure can help reduce shortfall penalties for not taking reasonable care or taking an unacceptable tax position, as well as the overall tax liability.

What If You Can't Pay?

If you can't pay your tax bill in full and on time, there are a few options available:

  • •Agreeing with Inland Revenue on an Instalment arrangement of up to 36 months to pay off the tax due. Note, this will still incur interest during this period
  • •Using tax pooling, as noted above, to delay payments
  • •Declaring financial hardship if you genuinely have no way to pay the tax and no assets to realise. This is on a case-by-case basis

Be aware that penalties and interest add up quickly (often exceeding the core tax amount), so the longer you wait, the worse off you're going to be.

6. If You Made a Loss

For the same reason, Crypto gains are taxable, and Crypto losses are tax-deductible.

Can You Get a Refund If You Made a Loss?

Circumstances depending, yes you can. If you have a salary that gets PAYE deducted, or earned dividends or interest with RWT deducted, you will have tax credits that may be able to be refunded. In the same way crypto gains get added to your income, crypto losses reduce your income.

Example:

Say you earned a $100,000 salary and made a $20,000 loss on your crypto portfolio. Your net taxable income becomes $80,000. If you've already paid $23k of PAYE on your full $100,000 salary, the actual tax due on your actual income of $80,000 is only $16k, so the $7k difference results in a refund.

If you claim a large refund, be prepared for the Inland Revenue to review your return. You may be asked to provide:

  • •Full transaction logs across all wallets and exchanges
  • •Wallet addresses and exchange account statements
  • •NZD valuations for all disposals
  • •A clear report explaining how the loss was calculated

As mentioned previously, using crypto tax software such as Koinly or CryptoTaxCalculator can simplify this process.

Tax Losses to Carry Forward

If you don't have any tax credits or have paid any tax during the year, there won't be anything to refund. This loss isn't wasted; you are instead able to carry the loss forward to offset future profits.

Example:

If you made a $100,000 loss in the 2024 tax year and a $150,000 profit in 2025, your taxable income in 2025 would only be $50,000. The carried-forward loss absorbs the first $100,000 of profit.

This is one of the key reasons it's still worth filing a tax return, even in a year when you've made a loss, because you can bank the benefit for later.

Multi-Year Profit and Loss

Losses can be carried forward, but unfortunately, cannot be carried back. We often see people making large profits in bull run years and large losses in later bear run years, which results in a large tax bill, and then large losses that can't be offset.

Example:

If you made a $100,000 gain in 2021 and paid $33,000 in tax, but then lost $100,000 in 2022, you have a $33k tax bill, potentially no funds to pay it, and $100k of losses that can only be used to offset future profits.

8. Other Structures and Taxes

Personal vs Company: Can You Pay Less Tax Using a Company?

A common question is whether you can reduce your tax by putting crypto income through a company and paying just 28%. The short answer: it's not that simple.

A company is a separate legal entity. To move crypto into a company, you'd need to formally sell or contribute it, which in itself is a taxable disposal. You would owe tax on any gain at the time of transfer from personal to company ownership.

Even if the company is taxed at 28%, once you withdraw profits as dividends or shareholder salary, you'll pay top-up tax to bring the total back to your personal marginal rate. Therefore, there is usually no net benefit unless the company structure serves a broader commercial purpose.

For the structure to be accepted by IRD, the company must be:

  • •Actively engaged in crypto activity
  • •Commercially operated with clear documentation
  • •Consistent with the purpose of generating profit as a business

Otherwise, IRD may consider it a tax avoidance arrangement and disallow the benefit under the general anti-avoidance rules in the Income Tax Act.

Setting up a trust doesn't offer a solution either. Trust income is taxed at 39% unless distributed to beneficiaries. Distributions come with their own compliance obligations.

Other Impacts of Crypto Income

As crypto is considered a form of income, it has several knock-on effects on the following:

Student Loan Repayments

If your total income (including crypto) exceeds $24,128, Inland Revenue requires you to repay 12% of the excess toward your student loan. This means if you have a student loan and made a $100k profit on crypto, you may have an additional $12k that is required to be paid against your student loan.

Working for Families Tax Credits

Crypto gains are considered part of your family income when determining your eligibility for Working for Families entitlements. If your crypto profits push your total income above the set thresholds, your tax credits may be reduced. This can be unexpected, particularly for those with modest household earnings.

If you receive Working for Families and had a strong year, your return may trigger a reassessment or repayment obligation.

Structuring Considerations and Common Missteps

Joint Crypto Holdings

If you and your partner hold crypto in a joint account and make investment decisions collaboratively, dividing income may be possible. Keeping records of this arrangement is vital, ensuring both parties have genuine decision-making authority and access to the assets.

Allocating Income to Children

Trying to allocate crypto profits to a child is unlikely to pass the IRD's scrutiny, unless the child solely owns and controls the assets. If you're trading, making the decisions, and holding the private keys, it's your income.

9. Can I Claim Expenses?

The short answer is yes. However, it depends on how you're engaging with crypto.

Your associated costs may be tax-deductible if you're actively trading, operating a crypto-related business, or otherwise involved in crypto. You can still claim a few core compliance expenses even as a more passive investor.

What Every Investor Can Claim

Some expenses are always deductible, whether you're trading daily or just reporting gains from a few transactions. These typically fall under compliance costs and include:

  • •Accounting fees, such as the cost of preparing your crypto tax return
  • •Crypto tax software subscriptions, such as Koinly or CryptoTaxCalculator

These are considered deductible, as part of your obligation to comply with tax requirements.

What Crypto Traders or Businesses Can Claim

If your crypto activity is frequent, structured, and profit-focused - in other words, if it amounts to a business or trading activity, you can claim a broader range of expenses, provided they are directly related to generating income.

Crypto-Specific Costs

  • •Cold wallets and hardware wallets, like Ledger or Trezor
  • •Seed phrase storage tools or backup devices
  • •Blockchain explorers or analytics tools
  • •Gas fees and network charges, unless they're capital in nature (i.e. part of acquiring a new asset)
  • •Trading bots and automation software subscriptions

Technology Costs

Expenses for equipment used in your trading activity may be deductible, such as:

  • •Laptops, desktops, and monitors
  • •Keyboards, webcams, and computer accessories
  • •Mobile phones and mobile plans, if used partly or wholly for trading or crypto management

Note: You may also be able to claim depreciation on capital items like your computer.

Subscriptions and Research Tools

These can generally be deducted if used to inform or support your trading:

  • •Premium trading platforms
  • •Market research newsletters
  • •Technical analysis tools like TradingView or CoinMarketCap Pro

Home Office Expenses

If you're trading from home, you may be able to claim a portion of:

  • •Rent or mortgage interest
  • •Internet and electricity
  • •Council rates and insurance
  • •Depreciation on your work-related equipment

However, these must be apportioned based on actual business use. For example, if your home office is used for crypto activity 30% of the time, you can claim 30% of your total office expenses.

Interest on Borrowed Money

If you've taken out a loan specifically to purchase crypto for income-earning purposes, you may be able to claim the interest on that borrowing.

However, this can be a grey area. It's important to keep accurate records to prove the borrowed funds were used for income-generating activities rather than speculative holding.

How to Keep Track of Expenses

Similar to tracking your crypto transactions, it's equally important to track your expenses for accurate tax reporting and to safeguard against audits. Proper documentation of your expenses ensures compliance and helps minimise your tax liability.

We recommend:

  • •Keeping a summary of expenses by category (e.g. hardware, subscriptions, or software)
  • •Using a separate chequing account and debit card specifically for this to keep record-keeping easier
  • •Using a separate wallet for any on-chain purchases to help easily identify expenses vs disposals
  • •Saving all invoices and receipts
  • •Using crypto tax tools or accounting software to log expenses, alongside your trades and gains

10. DIY vs. Professional Help

Crypto tax software has come a long way. For simple situations, DIY tax filing is a perfectly reasonable option. However, as soon as your crypto activity gets more complex, the risks of getting it wrong increase significantly.

When It's Safe to DIY Your Crypto Tax

If your activity is relatively limited and straightforward, you may not need professional help. You're probably in the clear to file your return yourself if:

  • •You've made only a small number of trades
  • •You've used major, well-known exchanges such as Binance, Easy Crypto, or Coinbase
  • •You have not engaged in DeFi, margin trading, staking, or NFTs
  • •Your records are complete, with no lost access or closed-down platforms
  • •You've imported your data into crypto tax software like Koinly or CryptoTaxCalculator
  • •Your wallet and chain coverage is limited and manageable
  • •Your tax report shows no warnings, errors, or reconciliation issues

In this case, you can generate your report, review it, plug the final figures into your IR3 return, and be done. You may not need an accountant at all (unless, of course, you want reassurance or a second opinion).

When You Should Hire a Professional

However, we strongly recommend speaking to a crypto tax specialist if:

  • •You've participated in DeFi (such as Aave, Uniswap, staking, or liquidity pools)
  • •You've used multiple blockchains or have 10 or more wallets
  • •You've traded with leverage, used perpetuals, or bought crypto options
  • •You've received airdrops, minted NFTs, or earned royalties
  • •You have missing records or liquidation proceedings from platforms like Cryptopia, Celsius, or FTX
  • •Your report includes thousands of transactions, or software-generated errors and gaps
  • •You don't fully understand your tax report's result or how it was calculated
  • •You're under IRD review, need to amend a previous return, or plan to make a voluntary disclosure

In these situations, a crypto tax accountant can help by:

  • •Reviewing and correcting any tagging or cost-based mismatches
  • •Distinguishing taxable from non-taxable events more accurately than software
  • •Ensuring you don't overpay, either by missing out on deductions or mistreating disposals

Hiring an accountant who understands the crypto market often saves you money in the long run.

Common DIY Mistakes to Watch Out For

Mistakes can happen even if you're careful and thorough with your crypto activity. Here are some of the most common DIY crypto tax mistakes:

  • •
    Missing wallets: If you forget to import a wallet, transfers between it and other wallets may be treated as disposals, leading to incorrect disposals
  • •
    Incorrectly tagging income: Airdrops, staking rewards, and DeFi activity can be misinterpreted or misclassified, resulting in either overreporting or underreporting of income.
  • •
    Mismanaging bankrupt platforms: Withdrawals, rewards, and frozen funds from platforms like Celsius or FTX often require special handling that software doesn't automatically perform.
  • •
    Ignoring cost base errors: If a token's cost base resets incorrectly to zero, your reported gain will be artificially inflated. This is a common and costly mistake.
  • •
    Skipping the reconciliation step: Tax software isn't perfect. Manually reviewing transactions is critical, especially for edge cases and multi-leg trades.
  • •
    Relying on a generic accountant: If your accountant simply asks you for "the number from your report" and doesn't review the underlying transactions, they're basically relying on you to prepare it correctly. Crypto is a specialist area that requires an accountant who both understands the domain and stays up-to-date with the law.

11. Common Crypto Myths

One of the most persistent myths in the crypto world is that it's anonymous, untraceable, and outside the reach of government oversight. This is inaccurate, risky, and simply untrue.

The truth is, blockchain transactions are more transparent than most realise, and tools available to tax authorities are evolving fast. If you're counting on secrecy, you may be setting yourself up for serious consequences in the years to come.

Blockchain Isn't Anonymous

Public blockchains, like Bitcoin and Ethereum, don't show names or personal details. However, each transaction is recorded permanently and publicly. Once a wallet is linked to a real-world identity, the whole transaction history becomes visible and traceable, often more so than traditional banking systems.

Your wallet can likely be traced back to you if you've ever:

  • •Used a centralised exchange that required identity verification
  • •Linked your bank account to buy or withdraw crypto
  • •Purchased crypto using your name or email

Once the IRD makes that link, every transaction is effectively exposed.

Global Data Sharing Is Increasing

New Zealand is part of several international tax transparency frameworks that enable the automatic exchange of financial information between countries. As these systems evolve, crypto exchanges are increasingly required to collect and share customer data with local regulators and through global cooperation channels.

Inland Revenue has already begun requesting customer data from crypto exchanges and contacting taxpayers believed to have undeclared digital assets. As international cooperation increases, it becomes more difficult for individuals to shift assets without detection.

Most centralised exchanges now operate under strict KYC (Know Your Customer) and AML (Anti-Money Laundering) requirements. These regulations require exchanges to:

  • •Verify user identity
  • •Maintain detailed transaction logs
  • •Provide data to authorities when requested

If you've completed KYC verification on an exchange like Binance, Kraken, Coinbase, or Easy Crypto, you've already created a data trail that can be accessed or matched by IRD.

The Inland Revenue is Watching

IRD is stepping up its enforcement efforts in response to the growing popularity of crypto, including:

  • •Requesting data from both NZ-based and offshore exchanges
  • •Sending targeted letters to taxpayers suspected of under-reporting
  • •Increasing audits and investigations

Inland Revenue has the power to go back and reassess your previous tax returns up to four years under time bar limitations; however, it can also go back indefinitely to the extent the return is fraudulent or wilfully misleading or omits income. Even if you're not audited today, a retrospective assessment years down the track could result in back taxes, penalties, and interest that far exceed what you would have owed originally.

Conclusion

As the saying goes: more money, more problems. And while navigating tax on thousands of crypto transactions, staking rewards, NFTs, and DeFi activity can feel overwhelming, there's a silver lining. If you have tax to pay, it means you made money. Even if those gains feel unrealised or locked up in tokens you're still holding, it's a signal that something went right.

But with complex rules and limited guidance, it's easy to make costly mistakes. That's why smart recordkeeping, using crypto tax software, and seeking help when needed can make all the difference. Don't rely on the myth that crypto is untraceable. The blockchain might be pseudonymous, but your tax bill isn't.

As uncomfortable as it might be, the old saying holds true: nothing in life is certain except death and taxes. So if you're in the game, don't wait until IRD comes knocking. Track it, report it, and get on the front foot.

Because in the world of crypto, staying compliant isn't just about following the rules, it's about protecting your gains.

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