Something New... Cryptocurrency

If you’ve been hearing words such as currency trading, bitcoin, tokens, exchanges, booklets, wallets and they sound foreign, don’t worry - they did to us too when we were first made aware of the tax complications with such investments!

The hard part about Cryptocurrency is that it’s unseen, there is nothing physical to show for the investments, just the initial cash out or in.

So why do we need to know about this?

There will be tax payable on all Cryptocurrency gains.  Depending on the frequency of cryptocurrency transactions we will need to disclose to the IRD any gains made on disposal or exchange of coins held.  When there are a high frequency of transactions you may be classified as trading cryptocurrency where we will need to disclose to the IRD the gain or loss in value of your cryptocurrency assets at each balance date.  This is very different to how we would treat shares so not the normal for most of you.

What information do you need to keep?

You will need to keep a record of the number of coins, value and date of all coins purchased, exchanged or sold.

It is important that you give us the right information so that we can give you the right tax advice, and to do so we’ll need the right paperwork!  Cryptocurrency has been a hot topic with the IRD and we guess it’s because the correct tax treatment has not been done.

Watch this space as it could well be an audit target!