New Zealand’s tax authorities have recently made a significant announcement regarding the taxation of cryptocurrency income. According to reports, over 200,000 citizens in the country have failed to declare their earnings from digital assets in their tax returns. The Inland Revenue Department (IRD) has issued a stern reminder that virtual assets are taxable and has vowed to take stronger measures to track down individuals who are not disclosing their crypto income.
The IRD has specifically targeted taxpayers who are actively involved in cryptocurrency transactions but have not reported their earnings to the tax authorities. In 2020, New Zealand updated its guidelines on the treatment of digital assets, categorizing cryptocurrencies as a form of property for tax purposes. This means that any profits made from trading cryptocurrencies are subject to taxation, as emphasized by the IRD.
The tax authority has identified over 227,000 unique crypto users in the country, with a staggering 7 million transactions totaling a value of NZD 7.8 billion (approximately $4.77 billion). This data has enabled the IRD to pinpoint customers who have not fulfilled their tax obligations and to identify users with significant holdings in digital assets.
Trevor Jeffries, a spokesperson for the IRD, emphasized the importance of declaring crypto profits and paying taxes accordingly, especially as the market for cryptoassets has experienced significant growth. Jeffries urged investors to consider their tax obligations and the risks associated with non-compliance, stating that the IRD has provided extensive guidance on crypto taxes.
In an effort to ensure compliance, the IRD has stepped up its activities to track taxpayers who own digital assets. The tax department has sent letters to crypto investors who have not properly declared their income, warning them of the consequences of non-compliance. Jeffries highlighted the IRD’s ability to identify individuals engaged in crypto activities, dispelling the misconception that people are anonymous on the blockchain.
Despite the lack of comprehensive crypto regulations in New Zealand, the government is taking steps to address the issue. Minister of Commerce and Consumer Affairs Andrew Bayly has called for a more proactive and innovation-friendly approach to regulating digital assets and blockchain technology. The government is considering recommendations to support the industry’s growth and ensure compliance with tax laws.
Overall, the crackdown on untaxed crypto income in New Zealand highlights the growing importance of regulatory oversight in the cryptocurrency space. As digital assets continue to gain popularity, tax authorities around the world are ramping up efforts to ensure that individuals are fulfilling their tax obligations when it comes to crypto earnings.