We’re currently preparing 2025 tax returns for our cryptocurrency clients, and most are in profit which means they have tax to pay.
If the tax amount owed is under $60,000 your payment is due on 7 April 2026. If the amount is over $60,000, then the payment was due 7 May 2025, and interest is already ticking up.
In our view, the most important thing right now is certainty. You want to know what’s due, when it’s due, and how you’ll fund it. No one likes a surprise tax bill, especially when your portfolio is bouncing around and everyone’s predictions for the market differ wildly.
Step One: How much tax do you actually owe?
Once your tax return is prepared, this number should be clear. We recommend calculating this early so you have time to prepare. Knowing the number means you can plan without second-guessing or scrambling when the due date rolls around.
Step Two: When is it due?
If you're a client of ours and linked to our tax agency, your tax is due on 7 April 2026. If you're not, the due date is 7 February 2026.
This applies only if your total residential income tax is under $60,000 and your 2025 provisional tax was paid on time. If you missed provisional tax payments, interest applies from 7 May 2025, regardless of your final balance.
Step Three: How will you fund it?
This is where things often go wrong and where a bit of upfront thinking can make a huge difference.
A common trap is assuming a future loss can reduce a past profit. It can’t. Once the 2025 year ends, your profit is locked in for tax purposes. If the market dips in 2026, your tax bill from 2025 stays the same. We see this misunderstanding regularly, and it often leads to painful outcomes.
So what are your options?
1. Some clients choose to fund their tax from other sources (salary, business income, or existing cash). The upside is that you avoid triggering another taxable event by selling crypto. Otherwise, you can end up in a loop where selling crypto to pay tax just creates more tax to deal with next year.
2. Others take a different route and sell enough crypto now to set aside the tax in cash. This gives them certainty. Whatever the market does next, the tax is covered, and they can move forward without worry. Selling crypto now may also trigger tax for the current financial year, so you may need to sell more to cover both years.
3. Some prefer to stay fully invested. That’s okay but please be aware that this approach is effectively using leverage. You’re holding onto your crypto, while the IRD is still owed money. You’re taking a position that the market will grow, and you’re using borrowed funds (your tax bill) to do it.
If the market drops, your tax bill remains the same, but your portfolio shrinks. Let’s say you had $500,000 in crypto on 31 March 2025 and a $55,000 tax bill. By November, the market halves. You’re left with $250,000 — and still owe $55,000.
On the other hand, if the market runs and your portfolio grows to $1 million, you’ve grown your portfolio and you still owe the same tax, but you’re in a much stronger position.
The key is that both outcomes are possible. One gives certainty now. The other introduces risk and potential reward.
To help weigh it up, ask yourself:
If your portfolio halved in value tomorrow, would you still be able to pay your tax bill in full by 7 April 2026?
Are you unintentionally using leverage by leaving your tax unpaid and staying fully invested?
Would sleeping well at night with the tax funds already set aside outweigh the upside of staying in the market?
Everyone’s risk appetite is different, and there’s no one-size-fits-all answer here. But if you’re proactive, you give yourself more control, more clarity, and far less stress come April next year.
If you’d like help modelling what this looks like for your situation or want to talk through the options please contact us.
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Contact Us
Contact Tim Doyle or Luca Lamplough 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.
