Do I have to pay tax on Bitcoin I have earned?

Disclaimer: We are not a tax professionals. For advice specific to your situation, you should consult a qualified tax advisor or contact New Zealand’s Inland Revenue Department (IRD).

If you earn Bitcoin in New Zealand — whether as payment for employment, services, or through activities such as mining — it’s generally considered income for tax purposes. Just like receiving wages in New Zealand dollars, cryptocurrency income is taxed based on its fair market value in New Zealand dollars at the time you receive it.

Key Points:

  1. Employment Income:
    If you’re paid in Bitcoin (or any cryptocurrency) as part of your salary or wages, that payment is treated as income and is subject to income tax. You’d need to determine the value of the Bitcoin in NZD on the day you receive it and report that as part of your taxable income.

  2. Services and Business Income:
    If you earn Bitcoin from providing services (for example, as a freelance contractor) or selling goods, the value of the Bitcoin received must be included as income. This would be similar to being paid in foreign currency—just converted to NZD at the relevant exchange rate.

  3. Mining and Staking:
    Bitcoin acquired through mining or staking activities is also generally considered taxable income. The fair market value of the cryptocurrency at the time it is obtained needs to be recorded and declared as income.

  4. Further Disposal or Sale:
    If, after earning the Bitcoin, you later sell, swap, or use it to purchase something, any change in value from the time it was earned could also have tax implications—often treated as a gain or loss. Whether these gains or losses are taxable depends on your original intent and circumstances.

  5. Record-Keeping:
    You should maintain thorough records, including the date you received the Bitcoin, the quantity, and its NZD value at that time. Good documentation is essential if the IRD ever reviews your tax returns.

Next Steps:

In short, if you’ve earned Bitcoin in New Zealand, you’re generally required to pay tax on its NZD value as income at the time you receive it.