Unfortunately what constitutes “trading” vs “holding” is ill defined in NZ law. At least with shares you can make a case you’re holding them for dividends, that defence isn’t available for crypto.
Okay, but what if you use stablecoin in between?
That's strange..
Assuming an arms-length transaction: this would be like taking shares you own in one company and exchanging them for shares in another company. Typically you would sell them for money in-between but even if they were traded directly you would need to recognize the capital gain at the price you traded them, based on the current value of what you got for them. This would be applicable to the current taxation period, and if the new shares tank it could generate a capital loss.
The example given of the guy that had NZ$1.6m - the tax became due when he sold his NZ$1.6m of tokens for what we must assume was NZ$1.6m of some other type of token. He should have calculated the gain at that point, set aside an appropriate amount of money for to pay the tax bill later, and spent only the remainder on the other tokens.
It seems to be similar in New Zealand, where the article says that (like the US) there's tax due when you exchange one token for another without going out to fiat. A lot of investors didn't realize that and didn't pay their tax in that first year, and then didn't have the money later when the government came collecting.
It indicates that when you switch your investment from one thing to another, that you have to then pay tax for your gain.
Which is very very normal.
Just that people in crypto not realized what it means when you trade bitcoin to another token which would be the equivielent of selling shares and buying something else like gold. As soon as you sell your shares you have to pay tax on gains.
But hey, the advantage of crypto was anyway that its an 'unregulated' market. Lets hope at least bitcoin just dies
Also, if this wasn't the case, it'd be a massive, gaping loophole. "Oh, I settled this stock in another currency, so I don't owe taxes yet/ever".
There are some situations where it maybe there should be an exception. When employee stock options are exercised, that's usually considered a taxable event, even if the shares aren't liquid (like in startups). This means you'd have to pay tax on something that you have to hold and could be worthless or forcing people into these events because the options may expire.
But for gods sake, whenever you "make" decent or life changing amounts of money, talk to a lawyer and accountant. There's so much misinformation about taxes out there. I used to work for a forex company and people, especially expats, would constantly move small amounts of money because they thought that they'd have to pay taxes on importing money into the country. They didn't realize that the forms they'd have to fill are only for reporting to deal with laundering. They could have just moved their money in one simple swoop.
> We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.
real estate? This is the most common asset that triggers a capital gain for most people.
You can be in loss from crypto trading and still owe taxes in DK. Yay!
Make a stupid rule, be surprised people are non-compliant.
If I sell Nvidia stock to buy AMD stock, I need to pay tax on my Nvidia stock gains.
1. can you recognize a capital loss on unregulated products like crypto and NFTs for favourable tax treatment?
2. do the exchanges (from an accounting perspective) trade directly between coins or move through a fiat (i.e. USD) currency?
So it might be more like "trading" stock directly without seeing the cash hit your account, which confuses people as to why they trigger a capital gain. The extra step of calculating the value of the source stock at the time of transaction is being missed.
The state doesn't give you protection on you buying shares either.
And if someone would steal your bitcoin, shares or whatever, the state would allow you to use the legal system to get it back. Its your issue if you use something which is inherant intransparent, partially anonmous and globally unregulated.
The tax is there to pay streets, kindergarden, schools, etc. btw.
Of course it does. If somebody takes my money but doesn't give me shares they are going to jail. If you try that with crypto the police will laugh you off.
They probably struggle helping you but thats a problem of crypto not of the police.
But hey crypto is 100% save right? You don't need help with crypto anyway. It solved all trust issues right? right?
What would that look like?
But paying a country I accidentally live in, just because I was lucky enough to get some gains that this country contributed nothing to, not even a legal framework, feels patently unfair.
* a country may step in to prop up failing markets or even companies, but they do this outside of a bankruptcy process, and rarely (never?) directly.
* an owner of an unsecured asset like crypto would one of the last in line when processing the bankruptcy (funny enough, the tax obligation of the company would be right near the top)
* you don't pay tax on your trades, but based on the outcome at the time of the trade.
* most countries tax individuals based on residency, and I think there's a good argument that you do get benefits both the physical and societal. You can decide if it's "worth it" but I'm not sure how it's "accidental". It's definitely true that the linkage between paying capital gains taxes and driving down a newly paved road is long and complex.