BDO Eyes on Tax: Crypto and precious metals - helping you understand what’s taxable (and why)

Unsure how New Zealand tax law applies to your gold, silver or cryptocurrency investments? It’s important to understand when Inland Revenue may treat gains on gold, silver or cryptocurrency as taxable income, and what you should keep on hand to support your position.

In this latest BDO Eyes on Tax video, business journalist Madison Malone sits down with BDO Tax Partners Iain Craig and Mark Lodder to find out what New Zealand investors in these assets should know. Watch their discussion and read their key insights below:


 

How are gold, silver and crypto taxed?

Unlike shares, which may not attract tax on sale if they’re acquired for long-term investment, Inland Revenue will often focus on your intention and behaviour when it comes to gold, silver and crypto. Where the evidence points to an intention of resale for profit, any gain on sale is generally taxable as ordinary income and must be included in your income tax return. The tax rate applied depends on your marginal tax rate.

Key factors that determine tax treatment

Whether you’ve already purchased assets like these, or you’re planning to, it’s important to understand what the factors are that determine how you may be taxed on them. 

1. Intention matters: Inland Revenue looks at why you acquired the asset. If your principal purpose was to sell for a profit, the gain is taxable.
2. Actions speak louder than words: Transaction history is important. Frequent buying and selling, or selling when prices peak, may indicate an intention to trade rather than hold.
3. Crypto complexity: Cryptocurrencies can involve ‘airdrops’, ‘forks’, ‘staking’, and lending. Income from staking or lending is also taxable. Airdrops and forks may be taxed if they’re part of a profit-making scheme or business activity.

How to stay tax compliant and avoid surprises

The following scenarios commonly create unexpected tax outcomes for investors in precious metals and cryptocurrency.

• Hedging does not mean tax free: Buying gold or silver as a hedge (such as against inflation) does not automatically exempt any profit from tax. Inland Revenue will assess your intention at the time of purchase, as well as your pattern of activity.
• Exemptions are limited and specific: While exemptions may apply in narrow circumstances (for example, purchasing gold for cultural purposes such as making wedding jewellery), these are uncommon and require clear evidence and good record‑keeping.
• Self‑assessment and increased scrutiny: New Zealand’s tax system relies on self‑assessment, meaning gains must be declared in your income tax return. Inland Revenue uses advanced analytics to detect undeclared crypto transactions and is increasing audit activity in this area.

Tax tips for planning with confidence

While alternative investments can offer diversification, they also come with complex tax considerations. Knowing how gold, silver and cryptocurrency are taxed can help investors and businesses plan with confidence.

• Declare income and gains when they’re taxable: If a sale results in taxable income (for example, where you acquired the asset with an intention of resale), you’ll need to include it in your income tax return.
• Keep thorough records: Keep a clear record of dates, NZD values, costs and supporting documents (for example, exchange statements and wallet addresses). Good records make it much easier to complete returns and respond to any Inland Revenue queries.
• Stay informed: Inland Revenue is actively monitoring crypto activity and increasing audits. Non-disclosure can lead to Inland Revenue queries, penalties and interest.

Key takeaways

If you intend to sell these assets for a profit, you can expect to pay tax. The rules are designed to ensure fairness and transparency, and Inland Revenue is vigilant in enforcing compliance. 

Your tax outcome will usually depend on your intention when you acquired the asset and what your actions show over time. Profits on sale can be taxable, and crypto-related events (such as staking rewards, lending income, airdrops and forks) can also create taxable income in the right circumstances. Keep thorough records (dates, NZD values, wallets/exchanges and costs) and get advice early if you’re unsure.

How BDO can help

If you’re unsure about your obligations or need advice on managing your investments, reach out to your local BDO adviser for guidance.

Watch more insights in our Eyes on Tax video series, covering topics including tax residency, expanding your business overseas and trustee tax.