If I were to buy bitcoin and deposit it into Stake (online crypto casino) would I have to pay tax on my winnings?
Would I have to pay Tax if I buy cryptocurrencies to do online gambling?
bullseye on 31/12/2022 - 21:24
Last edited 01/01/2023 - 21:40
Last edited 01/01/2023 - 21:40
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Tax owed on profit when you transfer it in any way - eg sell it, move it to another wallet, give it to someone else, spend it, exchange for different coin etc.
I bought a bunch of random coins of different types for the tech experience years ago in 2017 when it was all hyped. So not for the purpose of selling. Haven't touched them since 2017 some are now defunct or near worthless, some are trapped in a defunct exchange all sorts of outcomes. One coin however has done extremely well so they are worth significantly more just by random chance it seems and the gain is considerable. I guess I will need to ask the IRD or an accountant or something but before I rattle that cage.. would this not fall into capital gains and thus not taxable?
Interested in which coin it was.
BNB - Bought a few hundred when they were like $1 each in 2017 - also have like 50k DOGE coin which cost like 50 bucks at the time. Which are worth a bit more now also. But then have a list of about 20 others that no longer exist. Saying that - the total expenditure was like 2 or 3k over a few months, which was down to almost nothing at one point which is where I lost interest, which seems in hindsight to have been a good thing. I actually had to recover my PC from under my house to get the HDD out a few months ago to remember what I bought.
I just bought 9000 dogecoins for $1000 bucks
While the general IRD advice on cryptocurrencies is relevant, I think the more important question is the gambling itself. I can't seem to find any specific advice from IRD and if you search there is some spectacularly bad (IMO) advice from gambling sites etc insisting you don't have to pay income tax. However I'm fairly sure the answer is more complicated as mentioned in this old Stuff article https://www.stuff.co.nz/national/4910670/Online-poker-tax-a-… and this site https://www.onlinegambling.co.nz/faq/ (one of the few which does a decent job).
Just like when dealing with cryptocurrencies, or share traders, or house flippers etc (even before the recent changes), people buying stuff to resell on Trademe etc if you're regularly doing it with the intention of making it a part of your income it's quite likely that the IRD would consider that income you needed to declare if they ever looked in to it. Since people are liable to lie if asked, they'll likely look in to your other activities etc. So a professional poker play probably can't legally avoid paying income tax. This https://www.findex.co.nz/insights/article/placing-a-bet-on-t… does illustrate that it can be complicated since e.g. a problem gambler may also be regularly gambling, although it sounds like it's mixing different jurisdictions.
IRD aside, if you are on certain benefits you might also need to declare winnings to WINZ https://www.workandincome.govt.nz/on-a-benefit/tell-us/incom….
I was sure I'd read something related on the IRD website before. Finally found it when I considered I was searching for the wrong thing. I was looking at gambling but I'd looked into this before in relation to lotto. Found https://www.ird.govt.nz/income-tax/withholding-taxes/schedul… (Actually think this might have shown up in an earlier search but I ignored it since I thought it was only aimed at people running competiitions.) While it still doesn't deal with the situation that well since it doesn't really give any examples from professional gambling it does say
However, if prize money is won as part of someone's taxable activity, then it is generally taxable. It must be included as business income or as a schedular payment (if tax is deducted from it) in the person's tax return.
And if you click on taxable activity it explains
A taxable activity is a continuous or regular activity undertaken by any person that supplies or intends to supply goods or services for money or other reward.
Which okay may seem a bit weird when talking about gambling. The examples given of people who might have taxable prize money are
a farmer who wins money for an exhibit at an agricultural show
an author who wins prize money for one of their books in a competition
a professional sports person’s prize winnings.Of these professional sports is the closest although many will dispute if things like poker etc are really sports and some may also not call them prize winnings. (I mean if you regularly enter WSOP and other major poker tournaments maybe this will more clearly apply but I don't think you have to go to that level for the IRD to take an interest, and also if you just enter a single tournament even if you win the WSOP main prize you might still not be doing it professionally.) However I think it's clear enough when you think about it, especially then you consider other examples outside of gambling that cited.
Oh and in case there is any doubt of some of my earlier examples see e.g. https://www.business.govt.nz/news/selling-online-hobby-or-bu…, https://intercom.help/sharesies/en/articles/5136018-am-i-a-s…, https://investnow.co.nz/paper-gains-tax-cuts-why-the-ird-has…
https://www.ird.govt.nz/cryptoassets/individual