ACT promises tax-free crypto gains after a year

The ACT party wants to allow people to make tax-free profits from cryptocurrencies, like Bitcoin, as long as they hold onto it for more than a year.

It would also make it easier to use crypto for small purchases by creating a tax exemption for such low-value transactions.

Inland Revenue says 355,000 New Zealanders use crypto, with $36 billion worth of transactions recorded.

Under the current rules, investors have to calculate tax on profits every time they sell or swap their assets.

ACT's campaign pledge, unveiled on Thursday, would mean any gains made on certain personal crypto held for more than 12 months would not be taxed.

Professional traders or businesses trading crypto would continue to pay tax under the current rules, as would anyone who offloaded their assets within a year.

ACT deputy Nicole McKee said the proposed changes would give everyday investors "certainty and simplicity" and remove unnecessary tax compliance.

"Inland Revenue should focus on significant taxable activity, not trivial transactions that create more paperwork than revenue."

ACT also promised to introduce clearer rules for companies working with digital currencies, such as stablecoins, and a new system where financial start-ups could test new ideas without facing all the same rules as big banks.

It would also investigate whether red tape was unnecessarily preventing legitimate financial tech companies from opening bank accounts.

In April, Inland Revenue issued a reminder to those buying and selling crypto to "get tax compliant now" to avoid "an expensive surprise down the line".

"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," a spokesperson said.