On Thursday, the tax authority of New Zealand disclosed that it is concentrating on individuals who are actively trading cryptocurrency and have not disclosed their income from these transactions in their tax filings.
The Inland Revenue Department (IRD) has disclosed that it has identified 227,000 crypto users in the country who are involved in approximately 7 million transactions, with a total value of NZ $7.8 billion (USD $4.7 billion).
The department has treated cryptocurrency as any other property for tax purposes since 2018. This implies that any profits generated through the acquisition, sale, or trading of cryptocurrency will likely be subject to taxation.
Trevor Jeffries, spokesperson for the IRD, has stated that the tax department has issued an additional round of warnings to potentially non-compliant crypto users, following a previously issued warning in late 2020.
“The data we possess has enabled us to identify consumers who are not paying their taxes,” he stated. “That data is currently being employed to identify consumers who possess substantial cryptoassets.”
“If individuals are generating income from cryptocurrency, they should consider their tax obligations and the potential consequences of failing to declare all related taxable activities.”
Additionally, Jeffries underscored that the department provides resources to assist individuals in comprehending their crypto tax obligations. Furthermore, he stated that the blockchain’s anonymity is not as commonly believed. The tax agency possesses the necessary resources to monitor and evaluate cryptocurrency transactions, thereby facilitating the detection of tax evasion.
There is a significant increase in the use of cryptocurrency in New Zealand, as a record number of individuals now possess cryptocurrency. A recent study indicates that this is partially attributable to a lack of trust in traditional banks and institutions, which some investors perceive as obstacles to attaining their financial objectives.
A study of more than 1,000 respondents revealed that 14% of them admitted to possessing cryptocurrency, either currently or in the past. Since 2022, there has been a 10% rise in this figure. Furthermore, nearly half of the respondents (45%) are contemplating the possibility of investing in cryptocurrency in the future.
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