Paying Tax On Cryptoassets As A Business

Cryptocurrency can be a complicated enough taxable asset for individuals to deal with, but when you own a business and deal with it as a part of your business transactions, the taxable consequences might go over your head. There are a lot of specific rules that you need to follow, and failing to do so could get you into a lot of trouble. 

 

Cryptocurrency may be an accepted form of payment for your business, and as a result, you’ll need to be aware of the special rules that apply to the asset. When using them in this matter, it is called a barter transaction, which falls under your business income. This will require you to pay tax on that income generated by the cryptoasset. 

 

To work out the tax that you will need to pay on a payment of cryptoassets, you will need to calculate the value of the cryptoassets in New Zealand dollars (NZD) at the time that they had been received. This is why it is important to keep accurate, detailed records of all of your business income and transactions to make this process smoother. 

 

In a barter transaction, the sale or exchange of cryptoassets may occur by your business. The amount received from this is also business income, and thus taxable income as it is a part of how you have earned your business profits.

In this instance, a deduction for cost equal to the value of the cryptoassets when they were received can be claimed. This is the same value that you paid tax on when you received the cryptoassets, and means that the income that you earned from the barter transaction will not be taxed twice over.

 

If the sale or exchange of cryptoassets are not part of your usual business activity, the amounts that you receive from them will not be considered a part of you usual business income. However, these amounts will still be taxable, especially if you: 

  • Acquired the cryptoassets to sell or exchange them, or
  • Were carrying out a profit-making scheme. 

 

If your business is using cryptoassets in a way that is considered taxable, you can come speak with us for advice and guidance on how best to work out the tax implications of the asset to ensure your compliance.

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