Your business might use cryptoassets even when it’s not a cryptoasset business.
When you use cryptoassets in your business you still need to account for them. You do this in the same way you would for any other business asset.
Receiving cryptoassets in exchange for goods or services
You may accept cryptoassets as a payment for goods or services you provide. We call this a barter transaction.
Cryptoassets you get in a barter transaction are still part of your business income. You need to account for GST and pay tax on this income.
To work out your tax, you’ll need to calculate the value of the cryptoassets in New Zealand dollars (NZD) at the time they are received.
Calculating the New Zealand dollar value of cryptoassets
Selling cryptoassets you got from a barter transaction
You will often sell or exchange the cryptoassets you got from the barter transaction. This amount is also business income and taxable because it’s part of how you earn your business profits.
In this case, you can claim a deduction for cost equal to the value of the cryptoassets when you got them. This is the same value you paid tax on when you received the cryptoassets in the barter transaction. This means the income you earned from the barter transaction is not taxed twice. GST is not payable on this sale of cryptoassets.
Cryptoassets that are not part of your usual business activity
You might sell or exchange cryptoassets when it’s not part of your usual business activity.
Any amounts you get from the sale or exchange of those cryptoassets are not part of your usual business income.
However, these amounts are generally still taxable. They will be taxable if you:
- acquired the cryptoassets to sell or exchange them
- were carrying out a profit-making scheme.
Acquiring cryptoassets to sell or exchange
Using cryptoassets for a profit-making scheme
Paying tax on your cryptoasset income
If how your business uses cryptoassets is taxable, you’ll need to work out your taxable income.
Beaut Bikes Ltd sold an e-bike for 1 Bitcoin. At the time 1 Bitcoin was worth NZD$5,000. Beaut Bikes included $5,000 from the sale in its income.
A few days later Beaut Bikes sold the 1 Bitcoin for NZD$5,500. Beaut Bikes included this amount in its income. Beaut Bikes is also able to claim a deduction for $5,000 (the value of the Bitcoin when it received it).
In total Beaut Bikes pays tax on income of $5,500. This is made up of $5,000 for the sale of the bike and $500 profit on the sale of the Bitcoin.
If Beaut Bikes is GST registered, GST needs to be accounted for on the sale of the e-bike. GST will be paid on the sale of the e-bike in the normal way.