Ask ten forex traders in New Zealand if they pay tax on their trades, and you’ll probably get ten different answers – ranging from “you don’t have to if it’s just a hobby” to “nah bro, IRD doesn’t care.”
Let’s clear that up. Yes, you may have to pay tax on forex profits in NZ – and no, it doesn’t matter if you’re trading from your bedroom, your farm shed, or while parked up at Piha Beach. The IRD doesn’t care where you trade from. They care about why you’re trading and how serious you are.
As someone who’s been in the game for a while and had to navigate all this myself, I’ll break it down the way I wish someone had done for me years ago – no fluff, no tax-speak.
The Golden Rule: Intention Matters
In New Zealand, forex trading is taxed based on intention. Sounds vague, right? That’s because it is – and that’s exactly why it trips so many people up.
If you’re trading with the intention of making a profit, then the IRD considers that taxable income.
If you’re just dabbling for fun, with no expectation of profit, then it might be classed as a hobby. But let’s be real – most people don’t open a MetaTrader account just for the lols.
So, the big question is: Would a reasonable person say you’re trying to make money?
If the answer is yes, it’s probably taxable.
Hobby vs Business: Where’s the Line?
This is where most traders in NZ get confused. There’s no black-and-white rule, but here are some signs that IRD might see you as running a trading business:
- You’ve got a routine (e.g. you trade daily or weekly)
- You’ve deposited serious capital (not just $100)
- You keep records or have spreadsheets
- You follow news and use strategy
- You reinvest profits or withdraw regularly
- You’ve done a course, used leverage, or posted about it publicly
On their own, none of these are a smoking gun – but together, they show you’re taking it seriously. And that’s enough to make the taxman raise an eyebrow.
How is Forex Income Taxed in NZ?
Unlike countries that have a separate capital gains tax, New Zealand treats trading income as part of your personal income tax. That means:
- If you’re trading in your own name, your profits are added to your total income
- If you’re in the 30% or 33% tax bracket, that’s what you’ll pay on your gains
- You don’t pay GST on forex trades
- There’s no separate forex tax rate
If you trade through a company, things get a little different (flat 28% corporate rate, plus rules on distributions), but that’s a whole other rabbit hole.
What Can You Claim as Expenses?
Good news: if you’re declaring forex profits, you can also claim related costs.
These might include:
- Broker fees or spreads
- Data subscriptions (e.g. TradingView, Bloomberg)
- Internet costs (if used for trading)
- Part of your home office
- Paid courses or coaching
- Laptop or gear (depreciated over time)
The catch is, it all has to be related to the income you’re earning. Don’t go claiming your weekend in Queenstown because you read the FX news on the flight.
Do I Need to Register or File Anything Special?
Nope. If you’re trading under your own name, you just declare your forex profits (or losses) in the IR3 Individual Tax Return at the end of the tax year (31 March). There’s no special forex form.
If you’re trading through a company or trust, or you’re unsure how to record things properly, a quick chat with an accountant is worth the money – trust me on that.
What If I’ve Never Declared My Forex Profits?
You’re not alone. A lot of traders start small and only realise later they were meant to declare income. If that’s you, don’t panic – the IRD is usually more forgiving if you own up voluntarily.
Best move? Talk to a tax adviser, clean up the past few years, and get current moving forward. It’s better than waiting for a letter.
Final Thoughts
There’s a lot of misinformation floating around when it comes to forex tax in NZ – and the IRD doesn’t make it super clear either. But the bottom line is this: if you’re trading seriously and trying to profit, your gains are probably taxable.
Don’t wait for the IRD to come knocking. Treat it like a business, stay on top of your records, and keep it clean. If you’re in doubt, talk to a real accountant – not someone on a Facebook group.
Forex trading can be a powerful tool to build wealth – but only if you treat it professionally. Tax is part of the game.