ACT wants to fundamentally change the way New Zealand taxes cryptocurrency, promising that qualifying personal crypto gains would become tax-free once an asset had been held for more than 12 months. The party also wants exemptions for small everyday transactions and clearer rules for stablecoins and financial technology companies.
eLocal Report: Based on reporting by Craig McCulloch for RNZ HERE.
ACT has unveiled a cryptocurrency policy that would remove tax from qualifying gains on personal crypto assets held for more than a year, while retaining the existing tax treatment for professional traders, businesses and investors who sell within 12 months.
Under current Inland Revenue rules, New Zealanders generally need to calculate taxable income when they sell or swap crypto assets at a profit.
ACT's proposal would introduce a much clearer dividing line.
If an individual bought qualifying crypto such as Bitcoin as a personal investment and held it for more than 12 months, any subsequent gain would be exempt from tax.
If they sold within the first year, the existing tax rules would continue to apply.
Professional traders and businesses dealing in crypto would also remain taxable under current arrangements.
A Major Shift in Crypto Tax Policy
The proposal would represent a significant departure from New Zealand's present approach.
RNZ reports that Inland Revenue estimates around 355,000 New Zealanders use cryptocurrency, with approximately $36 billion worth of crypto transactions recorded.
That makes crypto taxation more than a niche issue.
As digital assets have become increasingly mainstream, investors have faced the practical problem of having to calculate tax consequences every time an asset is sold or exchanged.
ACT deputy leader Nicole McKee says the party's policy is designed to provide “certainty and simplicity” for ordinary investors.
“Inland Revenue should focus on significant taxable activity, not trivial transactions that create more paperwork than revenue,” she said.
The argument is essentially that long-term personal investment should be treated differently from frequent trading activity.
Small Crypto Purchases Could Also Be Exempt
ACT also wants to make it easier to use digital assets for everyday purchases.
Under the current system, using cryptocurrency to buy something can itself create a taxable event because disposing of the crypto may crystallise a gain or loss.
That can make even relatively small transactions administratively cumbersome.
ACT is proposing a tax exemption for low-value crypto transactions, although the material supplied does not specify the exact dollar threshold that would qualify.
If implemented, the change could make cryptocurrency more practical for ordinary payments rather than treating every purchase as a miniature investment disposal.
Stablecoins and Fintech Rules Also Targeted
The policy goes beyond individual crypto investors.
ACT says it would introduce clearer rules for companies operating with digital currencies, including stablecoins.
Stablecoins are cryptocurrencies designed to maintain a relatively stable value, commonly by being linked to a conventional currency such as the US dollar.
ACT also wants to establish a regulatory environment where financial start-ups could test products and services without immediately facing the full compliance burden applied to large established banks.
Such systems are often described as regulatory sandboxes.
The party also proposes investigating whether New Zealand banking rules or commercial practices are unnecessarily preventing legitimate fintech and crypto companies from opening bank accounts.
That issue has been a recurring complaint internationally from digital-asset businesses that say access to ordinary banking can become a significant obstacle even when their operations are lawful.
Inland Revenue Has Been Moving the Other Way
ACT's proposal comes at a time when Inland Revenue has been emphasising enforcement rather than relaxation.
In April, IRD warned crypto users to become tax compliant and said people should not assume blockchain transactions are anonymous.
“Despite popular thinking, people are not invisible on blockchain, and we have the tools and the analytics capabilities to identify and expose crypto-asset activities,” an Inland Revenue spokesperson said.
That warning reflects a broader international shift.
Crypto may have originally developed around ideas of decentralisation and financial privacy, but blockchain transactions are permanently recorded on public ledgers in many major cryptocurrencies.
Tax authorities increasingly use specialised analytics tools to connect blockchain activity with identifiable individuals and regulated exchanges.
ACT's proposal would therefore not make crypto anonymous or remove reporting obligations altogether.
It would instead change which gains are taxable.
Is 12 Months the Right Line?
The political attraction of a 12-month exemption is obvious.
It would create a simple rule that ordinary investors could understand: hold an eligible asset for more than a year and the gain becomes tax-free.
But the simplicity also creates questions.
One is whether crypto should receive more favourable treatment than other investments.
New Zealand does not have a comprehensive capital gains tax, but gains on many assets can still be taxable depending on the investor's intention when purchasing them and the nature of their activity.
ACT's policy would potentially give qualifying cryptocurrency investments a very clear statutory exemption that many other asset classes do not enjoy.
There is also the question of how the government would distinguish personal investment from trading.
A simple 12-month rule helps, but investors could still hold numerous positions, shift assets between wallets or exchanges, stake tokens, receive airdrops or interact with decentralised finance systems.
Those activities can create tax consequences considerably more complicated than simply buying Bitcoin and selling it 18 months later.
The eventual legislation would therefore need precise definitions.
What Would It Cost?
The material supplied by RNZ does not provide an estimate of how much tax revenue the government would forgo under ACT's proposal.
That figure matters.
If qualifying crypto gains currently contribute meaningful revenue, exempting them would have a fiscal cost.
If compliance costs are high while revenue from long-term personal investors is relatively small, ACT could argue the administrative savings justify the change.
Without a published fiscal estimate, that balance cannot yet be assessed.
The same applies to the proposed small-transaction exemption.
Voters would need to know the threshold, the likely revenue impact and how Inland Revenue would administer the system.
Does This Affect New Zealand?
Very directly.
Hundreds of thousands of New Zealanders already own or trade cryptocurrency, according to Inland Revenue figures cited by RNZ.
For those investors, ACT's proposal could materially change the after-tax return from holding digital assets.
Someone who bought Bitcoin, Ethereum or another qualifying asset and held it for longer than 12 months could potentially keep the entire capital gain rather than calculating taxable income on disposal.
For shorter-term traders, little would change.
There could also be wider implications for New Zealand's fintech sector.
Clearer regulation for stablecoins, easier access to banking and a regulatory sandbox could make New Zealand more attractive to digital-finance businesses.
But the policy would need to balance innovation against consumer protection, money-laundering controls, tax integrity and financial stability.
The key test will therefore be in the detail.
ACT has put forward a simple political proposition: reward long-term crypto investment, remove unnecessary compliance and make New Zealand more welcoming to financial technology.
The unanswered questions are how much revenue would be lost, exactly which assets and transactions would qualify, and whether the framework can remain simple once confronted with the complexity of modern digital finance.
Source
Craig McCulloch, Deputy Political Editor, RNZ
ACT promises tax-free crypto gains after a year
Independent reporting. Original context. Credited sources.