Crypto investors face tax crackdown as 70% non-compliant

https://www.thepost.co.nz/business/360897298/crypto-investors-face-tax-crackdown-70-non-compliant

by gochuks • 8 months ago

38 88 8 months ago

thepost.co.nz

belter• 8 months ago

In New Zealand...In the US there is a crypto startup running out of the Oval Office: https://democrats-judiciary.house.gov/sites/evo-subsites/dem...

mr_toad• 8 months ago

However, gains made from trading assets, including property, were taxed, and that caught crypto investors as the dominant reason for buying crypto assets is to later sell make a gain, rather than holding them as a long term asset like a home, or rental property.

Unfortunately what constitutes “trading” vs “holding” is ill defined in NZ law. At least with shares you can make a case you’re holding them for dividends, that defence isn’t available for crypto.

nathias• 8 months ago

why not? there are lots of crypto that yields profit by holding it

skeeter20208• 8 months ago

I don't think this is specific case here; seems more like less sophisticated investors buying new products don't know that selling them triggers a capital gain at the time of the transaction, regardless of what they may do with the proceeds AFTER the transaction date. In a nuteshell: a successful investment and an unsuccessful investment will be treated as independent events at the time the transaction occurs.

wongarsu• 8 months ago

It's also not immediately obvious to the uninitiated what should happen when you swap one asset for another, like when you trade DOGE for BTC. Or trade between BTC and a stablecoin, if you feel clever and think this avoids triggering capital gains.

Imho it's all just forex trading, but ask 3 tax authorities and you get at least 4 opinions so you really have to know the local rules

scotty797• 8 months ago

Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax.

Make a stupid rule, be surprised people are non-compliant.

nebezb2• 8 months ago

This is a very normal rule. Which part of the world do you live in, and do you hold public equities?

bryanlarsen5• 8 months ago

So what's a better rule that ensures those with wealth pay their fair share of taxes? All tax rules are unfair and distortionary and inefficient etc. You have to pick the least bad.

kiba• 8 months ago

Land value tax is progressive, efficient and non-distortionary.

flakeoil2• 8 months ago

What's stupid about that?

scotty797• 8 months ago

A single sale of crypto can really be 50 sales to 50 people at various prices. Calculating gain is virtually unworkable. Especially between crypto pairs where the value of one or the other isn't really known and changes every second and depends on particular exchange out of may you could be trading on.

When you sell NVidia stock and buy AMD it's a sale and a purchase. But if somebody gave you some AMD stock for your NVIDIA stock, there's no sale or purchase and the value of each is only a guess.

That's why reasonable countries decided it's way better to tax stuff on exit to fiat, via conversion or purchase of something other than crypto. And it works just fine. When it's crypto it remains Miki Mouse money, but when it exits to fiat and there's more of it than was put in, there's real and taxable gain.

Taxing crypto on every trade would be like taxing forex on every trade.

triceratops4• 8 months ago

Is it any different from selling TSLA, buying MSFT and triggering capital gains?

skeeter20208• 8 months ago

not conceptually, though I don't know much about crytpo and have 2 questions:

1. can you recognize a capital loss on unregulated products like crypto and NFTs for favourable tax treatment?

2. do the exchanges (from an accounting perspective) trade directly between coins or move through a fiat (i.e. USD) currency?

So it might be more like "trading" stock directly without seeing the cash hit your account, which confuses people as to why they trigger a capital gain. The extra step of calculating the value of the source stock at the time of transaction is being missed.

DennisP3• 8 months ago

Legally no, at least in the US and NZ, but technically yes. On any stock exchange I know of, you'd sell your TSLA for cash, then use the cash to buy MSFT. On crypto exchanges there tend to be a lot of trading pairs with tokens on both sides, so cash is never involved.

ambentzen• 8 months ago

Why is that a stupid rule?

If I sell Nvidia stock to buy AMD stock, I need to pay tax on my Nvidia stock gains.

scotty797• 8 months ago

Because, unlike at the stock market, the government provides no assurances regarding any part of the crypto trade that is being made. When things go south, fraud happens in crypto, government is pretty much zero help in most countries of the world at most times.

I imagine if it turned out you never possessed any AMD or Nvidia stocks and all of that was just fake number on a fake piece of paper there would be serious government involvement pretty much everywhere.

Also on more practical note, a single sale of crypto can really be a 50 sales to 50 people at various prices. Calculating gain is virutally unworkable. Especially between crypto pairs where the value of one or the other isn't really known.

When you sell NVidia stock and buy AMD it's a sale and a purchase. But if somebody gave you some AMD stock for your NVIDIA stock, there's no sale or purchase and the value of each is only a guess.

That's why reasonable countries decided it's way better to tax stuff on exit to fiat, via conversion or purchase. And it works just fine. When it's crypto it remains Miki Mouse money, but when it exits to fiat and there's more of it than was put in, there's real and taxable gain.

rsynnott3• 8 months ago

This is absolutely standard pretty much anywhere that has a capital gains tax.

brendoelfrendo3• 8 months ago

This is how gains are taxed under most regimes? You pay the tax when you realize the value of the asset; in this case when you exchange one asset of one value (bitcoin) for another asset of a different value (etherium).

skeeter20208• 8 months ago

this isn't really a "stupid rule" as much as a fundamental principal of accrual accounting: things go on the books at the time of the event, regardless of when money actually changes hands.

kopirgan6• 8 months ago

Article seems to suggest if you make gains but lost them later you still need to pay tax on the gain?!

That's strange..

SonOfKyuss• 8 months ago

Maybe the gains were realized but the losses weren’t since they were holding out for a rebound?

Glemkloksdjf3• 8 months ago

No it doesn't.

It indicates that when you switch your investment from one thing to another, that you have to then pay tax for your gain.

Which is very very normal.

Just that people in crypto not realized what it means when you trade bitcoin to another token which would be the equivielent of selling shares and buying something else like gold. As soon as you sell your shares you have to pay tax on gains.

But hey, the advantage of crypto was anyway that its an 'unregulated' market. Lets hope at least bitcoin just dies

tom_• 8 months ago

It happens when you exchange one type of token for another, that's the point being made. Broadly: the gain is calculated any time the value of the property is realised by using it to purchase some other thing. Using the thing to purchase money is one way of realising its value, and makes the calculations easy; but when used to purchase some thing other than money, the transaction can be assigned a monetary value and that's used to calculate the gain or loss.

The example given of the guy that had NZ$1.6m - the tax became due when he sold his NZ$1.6m of tokens for what we must assume was NZ$1.6m of some other type of token. He should have calculated the gain at that point, set aside an appropriate amount of money for to pay the tax bill later, and spent only the remainder on the other tokens.

kopirgan6• 8 months ago

Yes but if at the end of tax year you end up with overall loss, that's what should matter.. Not that you pay tax on each profitable transaction but not set off loss making ones.

See separate point re losses that happen next year that's tough luck lol. Govt not gonna help. Unless you go fully bust and they have nothing to collect.

weird-eye-issue2• 8 months ago

It's always been like this unless the gain and loss is in the same tax year (and they are of a certain type that can offset each other)

hylaride• 8 months ago

It makes sense when you think about it. If you made a huge capital gain and then "lost" it in Vegas how is that different than "losing" it via other means?

Also, if this wasn't the case, it'd be a massive, gaping loophole. "Oh, I settled this stock in another currency, so I don't owe taxes yet/ever".

There are some situations where it maybe there should be an exception. When employee stock options are exercised, that's usually considered a taxable event, even if the shares aren't liquid (like in startups). This means you'd have to pay tax on something that you have to hold and could be worthless or forcing people into these events because the options may expire.

But for gods sake, whenever you "make" decent or life changing amounts of money, talk to a lawyer and accountant. There's so much misinformation about taxes out there. I used to work for a forex company and people, especially expats, would constantly move small amounts of money because they thought that they'd have to pay taxes on importing money into the country. They didn't realize that the forms they'd have to fill are only for reporting to deal with laundering. They could have just moved their money in one simple swoop.

Spooky23• 8 months ago

People will spend vast sums of money to avoid paying a couple of thousand dollars for informed advice.

sigwinch2• 8 months ago

I think regular, small transfers are pedestrian-enough not to be reported. And in some countries, the information about a large transfer attracts offers of protection.

rsynnott3• 8 months ago

You buy a bitcoin for 20,000. You sell it for 50,000. At this point you probably owe capital gains on 30,000. You then take the 30,000, use it to buy an NFT, and later sell the NFT for 0.01 (because NFT). At this point you have had gain of 30k and loss of 30k. Now, it's going to depend a lot on exactly when all this happened and in which jurisdiction, but in many countries you probably owe tax on the 30k.

okokwhatever• 8 months ago

Yo! Evil genious!

chii• 8 months ago

That doesnt seem logical - the purchase of the NFT is a capital loss, which should offset the gains of the 30k of capital gains. Otherwise, it's an unfair tax regime.

qwertox• 8 months ago

Usually if the loss happens in the same year, you can use them to lower your tax on gains. In your NFT example you'd first owe 7.5k (assuming 25% taxation), and with the 30k loss you'll be able to balance what you owe. The problem starts if you sell the NFTs in the next year, because then you can't use those losses to balance the already made gains, but only use it for future gains.

bryanlarsen5• 8 months ago

Which jursidictions? Certainly not mine. If they happened in different years you'd have a tax in one year and an equivalently sized refund in another, but they'd balance out.

sputknick• 8 months ago

In America, the problem comes when the gain and the loss come in different years. If you make a big gain in 2024, but didn't pay taxes on that gain, then lose the money in 2025, they will come after you for failing to pay taxes in 2024 even though you no longer have the money in 2025. The lesson is to pay your taxes.

bryanlarsen5• 8 months ago

A bank will be happy to lend you the money to cover the spread since you have the collateral of a large tax refund in the future. It'll cost you a little bit of interest but it's generally not the catastrophe that people make it out to be.

kopirgan6• 8 months ago

Yes I understand the part about events across tax periods.. It's common everywhere, not aware of any jurisdiction that refunds.

skeeter20208• 8 months ago

I don't know how a future loss is treated from a tax perspective (does the lost investment generate a capital loss?) but overall this seems to be similar to standard tax accounting.

Assuming an arms-length transaction: this would be like taking shares you own in one company and exchanging them for shares in another company. Typically you would sell them for money in-between but even if they were traded directly you would need to recognize the capital gain at the price you traded them, based on the current value of what you got for them. This would be applicable to the current taxation period, and if the new shares tank it could generate a capital loss.

scotty797• 8 months ago

If a country gives you zero practical assurances when it comes to protecting your crypto assets, what is the tax for?

Kenji• 8 months ago

The tax is protection money so that you don't get beaten and put in a cage. Do you know how statism works?

Glemkloksdjf3• 8 months ago

For making profit or gains.

The state doesn't give you protection on you buying shares either.

And if someone would steal your bitcoin, shares or whatever, the state would allow you to use the legal system to get it back. Its your issue if you use something which is inherant intransparent, partially anonmous and globally unregulated.

The tax is there to pay streets, kindergarden, schools, etc. btw.

scotty797• 8 months ago

The state doesn't give you protection on you buying shares either.

Of course it does. If somebody takes my money but doesn't give me shares they are going to jail. If you try that with crypto the police will laugh you off.

triceratops4• 8 months ago

zero practical assurances when it comes to protecting your crypto assets

What would that look like?

scotty797• 8 months ago

If a crypto market fails with my money I'd like to be reimbursed. Like when the MtGox failed and Japan did a full bankruptcy process and reimbursed creditor to their best ability. I don't mind paying tax on my trades to Japan whatever it might be.

But paying a country I accidentally live in, just because I was lucky enough to get some gains that this country contributed nothing to, not even a legal framework, feels patently unfair.

weird-eye-issue2• 8 months ago

That's completely unrelated to taxes. The government does not give any assurance that any given company won't be totally worthless next year but they still have to pay taxes. Taxes aren't some type of insurance lol

brendoelfrendo3• 8 months ago

The tax is for everything the state does. Your capital gains taxes aren't just a fee to the government in exchange for protecting your crypto, and it's weird to assume that they are.

scotty797• 8 months ago

Of course they aren't. Country takes taxes because it can. And takes it wherever it can. Pretexts don't matter. But I can't blame people who have expectation of fairness to rebel when the government doesn't even bother to provide a plausible pretext.

superkuh• 8 months ago

https://archive.is/qs9kj - A mirror which includes the text of the article without having to execute random code from third parties.

fer• 8 months ago

Editing out because it can be misunderstood as a defense of tax evasion as per the child comment. I'll leave a quote from the cypherpunk manifesto instead

We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.

sigwinch2• 8 months ago

Please double-check your advice. Just because it’s not seen in a combobox within Canada, Ireland and Belgium doesn’t mean it’s invisible.

jones89176• 8 months ago

hodl

bookofjoe2• 8 months ago

Perhaps in New Zealand but VERY unlikely in the U.S. what with current governance.

olalonde2• 8 months ago

https://www.cnbc.com/2025/11/22/new-irs-requirements-crypto-...

bookofjoe2• 8 months ago

Trump will pardon anyone who's convicted.

brendoelfrendo3• 8 months ago

ITT: lots of people who don't understand tax law and would have been caught by this complain about tax law.

egman_ekki2• 8 months ago

Denmark says hold my beer, as usual with taxes. Gains are taxed at 37-51%, as regular income. Losses can only be deducted at about 26%.

You can be in loss from crypto trading and still owe taxes in DK. Yay!

skeeter20208• 8 months ago

that's wild - I guess they (knowingly or not) really want to discourage speculative and volatile investments!

lifestyleguru4• 8 months ago

How buying Novo Nordisk or Maersk is a volatile investment? It's to keep peasants away from capital markets.

lifestyleguru4• 8 months ago

Why even bother making money at all?

lifestyleguru4• 8 months ago

In many countries in EU, real estate is the crypto. The only investment vehicle without capital gains tax. Maybe it's causing demographic catastrophe, but at least few people make a lot of money.

HPsquared• 8 months ago

Also gold coins (they're "currency")

skeeter20208• 8 months ago

> The only investment vehicle without capital gains tax

real estate? This is the most common asset that triggers a capital gain for most people.

lifestyleguru4• 8 months ago

Let me introduce you the country of Poland. Other countries like e.g. Czechia tightened the rules but it's already too late looking at prices in Prague.

onesociety20223• 8 months ago

Well in the USA, there is the 1031 exchange which lets you defer capital gains when you buy/sell primary home and finally at death you can use the step-up basis rule to avoid paying the deferred capital gains completely when your heirs inherit it as well.

SoKamil• 8 months ago

Doyle says many crypto investors mistakenly think they can sell some Bitcoin to buy some Etherium, and that making that a switch like that did not trigger an obligation to pay tax.

Okay, but what if you use stablecoin in between?

scottiebarnes• 8 months ago

The swapping of any asset for another asset would be a taxable event

atypeoferror• 8 months ago

http://archive.today/qs9kj

Crypto investors face tax crackdown as 70% non-compliant

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