RNZ money correspondent Susan Edmunds.
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If someone was to make a loss trading crypto, how does one write those losses off against other income?
Inland Revenue has been cracking down on crypto-trader income recently and warning that people who have been making money probably need to pay tax on it.
You’re right that you can also claim losses you make on your crypto investments against your taxable income.
If you are currently being automatically assessed by Inland Revenue – that is, you’re not regularly filing tax returns – you’ll need to request a tax return to do this.
Deloitte crypto expert Ian Fay says you need to include the loss in return for the relevant tax year.
“A loss realised through a disposal of crypto for less than cost during the year to 31 March 2026 would be included in their 2026 income tax return, due to be filed by 7 July 2026, or 31 March 2027, if they have a tax agent.
“Where there have been multiple purchases and sales, there are specific rules that apply to determine the cost of the crypto that has been sold, generally either on a ‘first in, first out’ basis or ‘weighted average cost’.
“Where crypto holdings have gone down in value, but are still held and have not been sold, no loss can be claimed.”
As for how you do it practically, Inland Revenue offers some advice.
It says, when you complete your tax return at the end of the year, if your crypto income doesn’t fit into business or self-employed income, you need to report the income or loss in the “other income” box.
“To claim a loss, you need to show that if you’d made a profit it would have been taxable.”
With regards to KiwiSaver hardship withdrawals, I would like to know how many of those approved came from working Kiwis, how many were on some sort of benefit and how many were elderly. How much can someone on a benefit claim under hardship, before their benefit is penalised?
People aged more than 65 and withdrawing money from KiwiSaver won’t be captured by the hardship withdrawal data, because they have free access to their accounts.
The hardship withdrawal data doesn’t break out whether people are working or on a benefit.
The Ministry of Social Development told me that usually a withdrawal wouldn’t be counted as income and so wouldn’t affect the level of benefit that people can get, but if you’re making regular withdrawals over a period of time, it could be included in the calculations. It’s a good idea to check with MSD, if you’re in this position.
Withdrawn KiwiSaver money could also potentially count towards the asset threshold for the accommodation supplement.
Someone also asked me whether KiwiSaver withdrawals were counted as income for tax purposes – the answer to that one was no.
Why is the PIE tax based on your last two years’ pay, especially when one only has pension income? I would have thought the PIE tax applicable would be based on the tax year the money was earned, not based on income earned two years earlier.
When you are investing in a portfolio investment entity (PIE), such as most KiwiSaver funds, you pay tax at a prescribed investor rate (PIR), which is set according to your income.
As you say, this is based on the income earned over the past two years.
Deloitte tax expert Robyn Walker said it was hard to find any background policy papers that specifically stated why, but the logical answer was practicality.
“Anyone investing into a multi-rate PIE is required to provide the investment manager with a Prescribed Investor Rate (PIR). The PIR is intended to allow the investment income to be taxed at a rate that is approximate to the marginal tax rate of the investor (with the exception that the maximum PIR is 28 percent, which is of benefit to anyone on the 30 percent, 33 percent or 39 percent marginal tax rates).
“If a tax rate were to be based on the income that you earn in that same income year, this is likely to result in errors and unders/overs (similar to what happens with things like Working For Families payments). Instead, the PIE regime looks to the level of income in prior years in order to have a guaranteed tax rate that can be used by the PIE to undertake their tax calculations for each investor.
“The tax rules allow the investor to look at the income earned in the previous two years (rather than the most recent year), because practically, you might not yet know what your income was in the most recent income year. For example, if you were electing into a new investment on 2 April 2026, you might not have prepared your tax return or have all the information to hand to determine what your income was for the period 1 April 2025 – 31 March 2026.
“In that case, you would use the data from the tax return for the period 1 April 2024 – 31 March 2025.”
She said it also allowed for a level of concession, if your income fluctuated.
“When electing a PIR, an investor looks at whether ‘in either of the two income years before the relevant tax year’ income has been earned below certain thresholds.
“If someone is just receiving income from the pension, practically their PIR may be unlikely to change from year to year. Investment managers are still required to remind investors of the need to confirm they are using the correct PIR.”
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