ACT proposes scrapping capital gains tax on crypto

The ACT Party this week proposed removing capital gains tax on profits from the sale of crypto assets in New Zealand. The party’s policy paper says gains on tokens such as bitcoin and ether would not be treated as taxable capital gains when sold by individuals or businesses.

ACT argued the current tax treatment creates uncertainty for holders of digital assets and raises compliance costs. The proposal says clearer rules would simplify tax duties for investors and support blockchain businesses; it does not include an estimate of the revenue impact or specify any limits or thresholds for an exemption.

Under current law, New Zealand does not operate a universal capital gains tax on all assets. Cryptocurrency gains can be taxed under existing income and property provisions when they arise in the course of business or from trading activity. The Inland Revenue Department has issued guidance to help determine when crypto-related gains should be treated as income.

Tax advisers and economists responded cautiously, noting that some crypto profits are already taxed as income depending on intent and activity. They warned that a blanket exemption could create opportunities for tax avoidance and make enforcement harder if gains from frequent trading are not clearly separable from other taxable income.

Opposition parties and some fiscal commentators flagged potential revenue losses and the risk of increased speculative trading without stronger consumer protections. Consumer groups called for clearer reporting rules and tighter oversight of crypto exchanges to protect retail investors.

The party said it would pursue legislative change only with sufficient parliamentary support. The process would require drafting a bill, consulting the tax authority and stakeholders, and securing votes in Parliament. ACT has discussed measures to reduce reporting burdens for small investors while keeping rules to address fraud and large-scale evasion, and proposed distinguishing long-term holdings from frequent trading activity.

Internationally, governments use a range of approaches to crypto taxation and many are updating rules as markets evolve. The ACT proposal adds to the domestic debate over how tax rules should apply as digital assets become more widely used.