Monday -Friday - 9:00 - 18:00 New Zealand Time

Tax Updates

Cryptoassets Cryptocurrencies Tax treatment of Cryptoasset bonuses New Zealand crypto tax rules Staking rewards tax NZ Crypto disposal tax NZ Taxable income TDS 25/23 IRD Ruling on Cryptoassets Tax treatment

 

TDS 25/23: Tax Treatment of Cryptoasset Disposal and Staking Rewards

Issued: 6 October 2025
Decision Date: 9 June 2025

In this adjudication, Inland Revenue’s Tax Counsel Office examined whether gains from the disposal of cryptoassets, and rewards received from staking were taxable income under the Income Tax Act 2007.

Background

A couple jointly invested in a developing crypto project (“Crypto Y”), expecting future staking rewards of 5–10%. Shortly after purchasing, the price rose, and they sold nearly half their holding, reinvesting the proceeds into shares, bonds, and additional Crypto Y. Over the following years they bought more Crypto Y when prices fell, began staking once available, and later sold a portion for a significant profit, reinvesting again into blue-chip dividend-paying shares.

They initially returned all crypto disposals, staking rewards, and related expenses in their tax returns. Later, they sought to reverse these amounts, but Inland Revenue rejected the adjustment, leading to adjudication.

Key Issues Considered

The Tax Counsel Office considered whether:

  • Profits from selling Crypto Y were income under s CB 4 (acquired for the purpose of disposal).

  • The taxpayers were engaged in a profit-making undertaking or scheme under s CB 3.

  • Staking rewards were income under ordinary concepts under s CA 1(2).

Decision Summary

The Tax Counsel Office found:

  • s CB 4 applied : The taxpayers did not prove that their dominant purpose for acquiring Crypto Y was long-term income; the pattern of buying dips, selling peaks, and reinvesting for similar returns indicated a dominant purpose of disposal.

  • s CB 3 applied: Their behaviour showed a coherent plan involving acquiring, accumulating, staking, and selling Crypto Y for profit, exhibiting characteristics of a business-like profit-making scheme.

  • s CA 1(2) applied:  Staking rewards were regular, convertible to money, and represented a return on the staked asset; therefore, they were income under ordinary concepts.

Key Reasons

  • The taxpayers bore the burden of proof and did not show that their primary intent was long-term investment for staking returns.

  • Staking was not available at purchase, and equivalent returns could have been earned through lower-risk investments.

  • Their transactional behaviour—buying during lows, selling during highs, and reinvesting profits—aligned with an intention to realise gains.

  • Staking rewards were recurrent, had “money’s worth”, and were seen as compensation for contributing to the blockchain network.

New Zealand Tax Accountant.