Date posted: 10/08/2021 3 min read

NZ launches inquiry into cryptocurrencies

The New Zealand Parliament’s Finance and Expenditure Select Committee has called for submissions on its inquiry into the nature, impact and risks of cryptocurrencies.

In Brief

  • The terms of the inquiry are broad
  • Our consultation has highlighted the difficulty of trying to selectively apply traditional tax frameworks
  • CA ANZ is asking members for feedback on the issues

The New Zealand Parliament’s Finance and Expenditure Select Committee has called for submissions on its inquiry into the nature, impact and risks of cryptocurrencies. 

The terms of reference are very broad. In addition to the tax and financial implications of cryptoassets, the inquiry will also focus on the environmental impacts of crypto mining, and the risks of money laundering and financing terrorism regimes. 

The terms of reference are:

  1. To inquire into, and establish, the nature and benefits of cryptocurrencies:
    • to establish how cryptocurrencies are created and traded
    • to understand the environmental impact of ‘mining’ cryptocurrencies
    • to identify the risks to users and traders of cryptocurrencies.
  2. To identify the risks cryptocurrencies pose to the monetary system and financial stability, including tax implications, in New Zealand
  3. To establish how cryptocurrencies are used by criminal organisations
  4. To establish whether means exist to regulate cryptocurrencies, either by sovereign states, central banks, or multilateral co-operation.

Recent CA ANZ consultation

Recent consultation has highlighted the difficulty of trying to selectively apply traditional tax frameworks to cryptoassets on a piecemeal basis. 

CA ANZ has stated previously that the Government should establish a comprehensive framework for taxing cryptoassets based on current taxing provisions. We continue to believe that would be the most appropriate way to proceed.

Otherwise, we recommend the Government establish a taxation method that allows taxpayers to return tax on the increase in value of cryptoassets annually on an unrealised basis.

Our senior Tax Advocate, Jolayne Trim, wrote two overviews of key developments late last year. These cover recent tax developments such as whether cryptoassets can be held on capital account, and the Financial Markets Authority regulatory guidance. 

Member feedback welcome

CA ANZ welcomes feedback from members across the range of issues of this inquiry before 26 August. Members who would like to share thoughts or feedback can do so by emailing the NZ Tax Team at [email protected]

Trim will also facilitate a Sharing Knowledge webinar on Thursday 9 September that will cover the current tax issues and treatment of cryptocurrencies in New Zealand. She will be joined by CA ANZ members and Inland Revenue officials.

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