Date posted: 09/10/2020 5 min read

Cryptocurrencies, Coca-Cola and compliance

Inland Revenue have recently updated their guidance on cryptocurrencies. Our Senior Tax Advocate Jolayne Trim outlines key points to consider.

In Brief

  • Cryptocurrency is the subject of recent updated tax guidance from Inland Revenue
  • What tax issues do you need to think about?
  • What practical steps need to be taken?


Cryptocurrency has existed since 2009 and is completely different from other “currency”: No physical notes or coins exist and for most cryptocurrencies, there is no central agency controlling supply and regulation. They also fluctuate a lot in value.

In this article the term “cryptocurrency” refers to all types of crypto-assets - digital assets that use cryptography and are designed to work as a medium of exchange using blockchain.  This includes digital tokens and other digital financial assets.

Cryptocurrencies are a fast-evolving area, and we can expect to see more of them in our daily lives.  Recently, Coca-Cola announced they are looking into technology which will let you buy a coke from a vending machine using cryptocurrencies.

What do these developments mean for CA ANZ members?  In most places in New Zealand, there are members with clients who hold cryptocurrency.  Knowing how to treat them for tax purposes can be difficult. 

Tax developments to consider

Inland Revenue has recently updated its guidance on the tax treatment of cryptocurrencies. This is great news.  One important clarification is what Inland Revenue requires for record keeping purposes to support your or your client’s tax position. 

Holding on capital account

Another positive change is that Inland Revenue now accepts that taxpayers can hold cryptocurrency assets on “capital account” – that is, you will not be taxed on any gain on sale.  However, it also means that you cannot take a deduction for any loss.  Inland Revenue has suggested that where you hold cryptocurrencies that provide an income stream or other benefits, you may hold them for a purpose other than resale.  This will be a question of fact.

Where the cryptocurrency does not provide any benefits to the holder, Inland Revenue will assume that you have acquired them for the purpose of resale.


While there have been important amendments in Inland Revenue’s guidance, CA ANZ doesn’t believe that the updated guidance goes far enough.  For example, it is completely silent on how to treat cryptocurrency for GST purposes.  In our view, cryptocurrency should, in theory, be subject to GST under the current law.  Currencies are exempt from GST but currency is defined as being “of any country” – which of course does not apply to any current cryptocurrencies. If cryptocurrencies were subject to GST, anyone making a purchase using cryptocurrency would be required to account for output tax on the sale, in the same way as if they had made the supply rather than received it.  This would be a curious outcome and it is unlikely that many are currently doing this.

Fortunately, IR has proposed a law change to exempt cryptocurrencies from GST.  Chapter 3 of their recent GST issues paper discussed how it could be removed.  Either way, the supply of cryptocurrency is likely to be treated as an exempt supply.  While any legislation may not be introduced until next year, the document proposes back-dating the change to 2009, which would be good news for investors.

Records, records, records.

Anyone who has cryptocurrency, should be keeping detailed records, including details of any sales and purchases, acquisitions, realisations and other transactions.  Members we have spoken to on this topic suggest that the number of transactions can be extensive. Inland Revenue’s website suggests downloading transactions into a spreadsheet or using an accounting software package.

A note should be made of any cryptocurrency that is being held for an income stream, rather than to make a profit.

We’ll be covering developments on the GST issues paper and further cryptocurrency issues in future. If in doubt, have a thorough review of the Inland Revenue guidance, or come and speak to the NZ Tax Team.  We can put you in touch with other members who specialise in this area or suggest further resources.

CA ANZ’s submission on the GST policy issues paper 

This submission includes wider comments from CA ANZ on the treatment of cryptoassets for GST purposes.

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Recent GST policy issues paper

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More about cryptocurrencies from Inland Revenue 

Read through the details about:

Cryptocurrency record keeping for tax purposesBuying and Selling Cryptocurrencies