Coinspeaker
New Zealand Targets Untaxed Crypto Income from 227,000 Users
New Zealand’s tax authorities are taking a tougher stance on crypto investors who haven’t been reporting their income from digital assets. The Inland Revenue Department (IRD) has identified a significant number of crypto users potentially avoiding taxes, signaling a shift towards stricter enforcement.
The IRD revealed on Thursday that it has its sights set on 227,000 crypto users in the country. These individuals have been flagged for involvement in roughly 7 million transactions, totaling a staggering NZ $7.8 billion ($4.7 billion). This data highlights the growing adoption of cryptocurrency in New Zealand and shows the potential tax revenue at stake.
Since 2018, New Zealand has treated cryptocurrency like any other asset for tax purposes. That means profits from buying, selling, or trading crypto are subject to taxation. The IRD issued initial warnings to potentially non-compliant crypto users in late 2020, and a new wave of reminders is underway.
IRD Tracks Crypto Tax Obligations
IRD spokesperson Trevor Jeffries stressed that the department has the tools to track and analyze crypto activity. Popular misconceptions about anonymity on the blockchain hold little weight, according to Jeffries. He emphasized that the IRD offers resources to help individuals understand their crypto tax obligations and encourages cooperation.
“Data we have has helped us identify customers who are not paying their tax,” Jeffries said. “That data is also now being used to identify customers with significant crypto assets. […] If people are making money from crypto they should be thinking about their tax obligations on this income and the risks of not declaring all related taxable activities.”
New Zealand is witnessing a surge in cryptocurrency use, with a recent study revealing a growing distrust in traditional financial institutions. This distrust appears to be a driving factor behind the rise of crypto ownership, with some investors viewing it as a path to achieving their financial goals.
The study, which surveyed over 1,000 respondents, showed a 14% increase in digital assets ownership compared to 2022. This suggests a significant shift in investment preferences, with nearly half (45%) of those surveyed considering entering the crypto market in the future.
Regulation and Industry Growth
In April, New Zealand’s Commerce Minister, Andrew Bayly, called for increased government support for the crypto industry. He expressed concerns regarding the slow adoption of crypto and advocated for a regulatory refresh to create a more favorable environment for the sector’s growth.
The IRD’s crackdown on non-compliant crypto investors signifies a growing focus on regulating the digital asset space in New Zealand. As the virtual assets use continues to rise, striking a balance between fostering innovation and ensuring tax compliance will be crucial for the government. Collaboration between regulators and the industry can pave the way for responsible growth in the years to come.
New Zealand Targets Untaxed Crypto Income from 227,000 Users
