[2014-07-23] - New Zealand to Treat Bitcoin as Foreign Currency

[marcus_of_augustus]

http://www.interest.co.nz/personal-finance/71048/ird-says-bitcoin-should-be-treated-foreign-currencies-are-tax-purposes

Sounds reasonable, finally ...

No capital gains in NZ for long term holdings either ... place to be working with BTC methinks.

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[kjs]

Very sensible approach.  +1.

[Wesley]

As a New Zealander, I find this rather interesting. I wonder what they mean by the phrase "monitor any use of bitcoin"? It seems that they want to make sure that people who receive bitcoins in exchange for goods and services pay tax on their bitcoin income, but I'm not sure how this would be enforced. Surely they aren't planning on hiring people to sift through the blockchain?

[Swordsoffreedom]

This makes sense giving it the same treatment as a Foreign currency sounds like a fair and proper approach to Bitcoin

People should treat alternative currencies such as bitcoin in the same way they'd treat overseas currencies from a tax perspective, the Inland Revenue Department (IRD) says.

"We will monitor any use of bitcoin, along with all other forms of payment including cash and EFTPOS, but we have not identified bitcoin as a major compliance risk for the time being," the spokeswoman said.

"The key information that a taxpayer will need about each transaction or event with bitcoin is the date, the amount in $A, what it was for, and who the other party was, - their bitcoin address, at a minimum," the ATO says.

[Dogtanian]

I think treating it as foreign currency is the best way to go and gives it some legitimacy in my eyes. It also makes things easier and clearer to know where you stand legally or on the paying taxes front.

[Bizmark13]

New Zealander here. Surprised to see that there hasn't been any mention of this in the news. Couldn't find any mention of it in the front pages of any of the major news websites here either. It would be nice if there was more interest in Bitcoin in New Zealand but I guess us kiwis don't find cryptocurrencies to be newsworthy.

[marcus_of_augustus]

New Zealander here. Surprised to see that there hasn't been any mention of this in the news. Couldn't find any mention of it in the front pages of any of the major news websites here either. It would be nice if there was more interest in Bitcoin in New Zealand but I guess us kiwis don't find cryptocurrencies to be newsworthy.

Recall quite often that the anglo-axis PTB will test-run new policy, laws, tech., etc, in NZ because it is small contained microcosm of the wider sphere, usually as a experiment or trial balloon ...

Maybe it's all happening in stealth mode would be fitting for the next cryptobanking capital of the world.

[hilariousandco]

Seems like New Zealand have got the right idea with this approach.

As a New Zealander, I find this rather interesting. I wonder what they mean by the phrase "monitor any use of bitcoin"? It seems that they want to make sure that people who receive bitcoins in exchange for goods and services pay tax on their bitcoin income, but I'm not sure how this would be enforced. Surely they aren't planning on hiring people to sift through the blockchain?

Like you said it just means they'll be watching to make sure it's used legitimately and not for nefarious purposes or money laundering etc. They'll just tax it when people exchange it for fiat and want their capital gains cut. I very much doubt anyone will be 'sifting through the blockchain', but it could be used to snare someone in the future if they're not careful.

[Wesley]

Seems like New Zealand have got the right idea with this approach.

As a New Zealander, I find this rather interesting. I wonder what they mean by the phrase "monitor any use of bitcoin"? It seems that they want to make sure that people who receive bitcoins in exchange for goods and services pay tax on their bitcoin income, but I'm not sure how this would be enforced. Surely they aren't planning on hiring people to sift through the blockchain?

Like you said it just means they'll be watching to make sure it's used legitimately and not for nefarious purposes or money laundering etc. They'll just tax it when people exchange it for fiat and want their capital gains cut. I very much doubt anyone will be 'sifting through the blockchain', but it could be used to snare someone in the future if they're not careful.

Are you sure? This part of the article suggests otherwise:

"Generally, if someone sells goods or services in exchange for bitcoin, then the market value of the goods or services received in exchange is liable for tax. People should treat an alternative 'currency' dollar, such as bitcoin as they would a foreign dollar from a tax perspective, as transactions are assessable and deductible for income tax purposes to the same extent as other cash or credit transactions," an IRD spokeswoman told interest.co.nz

[hilariousandco]

Seems like New Zealand have got the right idea with this approach.

As a New Zealander, I find this rather interesting. I wonder what they mean by the phrase "monitor any use of bitcoin"? It seems that they want to make sure that people who receive bitcoins in exchange for goods and services pay tax on their bitcoin income, but I'm not sure how this would be enforced. Surely they aren't planning on hiring people to sift through the blockchain?

Like you said it just means they'll be watching to make sure it's used legitimately and not for nefarious purposes or money laundering etc. They'll just tax it when people exchange it for fiat and want their capital gains cut. I very much doubt anyone will be 'sifting through the blockchain', but it could be used to snare someone in the future if they're not careful.

Are you sure? This part of the article suggests otherwise:

"Generally, if someone sells goods or services in exchange for bitcoin, then the market value of the goods or services received in exchange is liable for tax. People should treat an alternative 'currency' dollar, such as bitcoin as they would a foreign dollar from a tax perspective, as transactions are assessable and deductible for income tax purposes to the same extent as other cash or credit transactions," an IRD spokeswoman told interest.co.nz

Eh? What would suggest otherwise? That's pretty much just what I said.

[ArticMine]

This makes a lost of sense particularly when considering the GST.

[nwfella]

Gotta say that some pretty forward thinking on their p.art.  Way to go NZ