If all your wallets and exchange accounts are in one name, every future profit lands on one tax return. That might mean 39 percent tax on every dollar, even if both of you funded the investment. The fix is simple, but it only works if you put it in place before you sell.
Most people assume ownership equals the name on the exchange account. That is not how New Zealand tax or relationship property law works. Crypto is like any other asset. If you both funded it, it’s likely that you both own it. The problem is that IRD will follow the records they see. If everything points to one person, then all the tax is loaded onto that return. Over time that can cost tens or even hundreds of thousands more than necessary.
Why this matters
Crypto gains are taxable in New Zealand if you buy with the intention of selling, or if you trade, stake, farm, or deal in NFTs.
There is no share register or property title for crypto, so without records IRD defaults to the account holder’s name.
Once the profit is realised in that name, your ability to spread the tax across both partners is limited (and creates more complexities).
IRD will follow the most obvious records, so the onus is on you to prove joint ownership. Document this before a taxable event to ensure income is allocated and taxed correctly.
Example 1
John and Karen Smith invest $200,000 of joint savings into Bitcoin. The account is in John’s name. It grows to $1,000,000 and is sold. The $800,000 gain is taxed entirely to John at 39% which results in tax of $312,000 payable.
If treated as 50:50 ownership, half the gain is taxed to John at 39% and half to Karen at 33%. The tax bill drops by more than $50,000.
Example 2
Another couple Josh and Stephanie Roberts hold $150,000 of crypto in Joshs’s name. Josh earns $200,000 from their job, and Steph earns $60,000.
When the portfolio grows to $500,000, the $350,000 gain is taxed fully at Josh’s top 39% rate. If it had been documented 50:50, part of the gain would have been taxed at Steph’s 17.5 and 30% brackets before they even reached 33%. The difference can easily run into the tens of thousands.
As crypto accountants, we often model this scenario for clients, and the savings are substantial.
Steps to protect yourself now
Document ownership now. If it was jointly purchased as relationship property, record a 50:50 ownership split, even if accounts are in one name.
Keep proof. Save bank statements, screenshots, or notes showing both partners funded the investments.
Allocate disposals correctly. When you sell, split the gains according to your documented ownership.
Check marginal rates. Use both sets of tax brackets rather than loading all the income onto one return.
Note: This strategy works well when there are gains, but consider losses too. If one partner has no income, allocating losses to them may mean the tax relief is wasted. In that case, it can be better to keep more of the ownership with the income-earning partner so the loss can be offset.
Review before a big event. If you are thinking about selling, run the numbers. Small adjustments now can prevent big overpayments later.
Is this bending the rules? No. Relationship property law already recognises joint ownership. The key is documenting it and having evidence to support the ownership.
What if IRD asks questions? If you have clear evidence of funding and an ownership record, you can support a 50:50 treatment. Without it, you will struggle.
Do we need to restructure everything now? Not necessarily. You can leave accounts as they are, but document beneficial ownership.
Once a gain is realised in one partner’s name, you cannot go back and split it later. The opportunity is lost. Crypto does not have a paper title like property or shares, so the burden is on you to create the record. The reward is clear. Tens of thousands saved in lifetime tax, and less IRD scrutiny when you eventually sell.
If all your crypto is in one name, now may be the time to review it.
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Contact Us
Contact Tim Doyle for a call or meeting to discuss any cryptocurrency tax or accounting questions. Our office is in Cambridge, Waikato, or we can arrange a video conference call.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
