Inland Revenue (IRD) has continued its focus on the taxation of cryptoassets with the release of items considering the taxation of cryptoassets received from airdrops and hard forks.
Consistent with earlier items, IRD says amounts received from disposing of cryptoassets should be treated as assessable income.
A crypto airdrop occurs when a cryptoasset is distributed for free to participants. They are commonly used to help a cryptoasset gain attention.
IRD considers the receipt of airdropped cryptoassets to be taxable in situations where the recipient:
If you are disposing the airdropped cryptoassets, IRD considers this to be taxable where a person:
In many cases, the disposal will be taxable. However, in some cases, airdropped cryptoassets may be passively acquired and will not be acquired for the purpose of disposal.
A hard fork occurs when a change in the protocol of a blockchain network results in a new cryptoasset diverging from the existing one.
IRD considers the receipt of cryptoassets from a hard fork to be taxable where a person:
IRD considers the disposal of cryptoassets received from a hard fork to be taxable where a person:
In most cases, the disposal will be taxable.
The taxation of cryptoassets is an area that is continually evolving. If you have acquired or sold cryptoassets this financial year, please speak with your adviser or contact a member of the Crowe Tax Advisory team.