On Thursday, the tax authority of New Zealand disclosed that it is concentrating on individuals who are actively trading cryptocurrency and have yet to disclose 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. Any profits generated through cryptocurrency acquisition, sale, or trading will likely be subject to taxation.
New Zealand Issues Warning Regarding Crypto Tax Obligations IRD
The tax department has issued additional warnings to potentially non-compliant crypto users, as reported by Trevor Jeffries, a spokesperson for the IRD. This follows a previous warning issued in late 2020.
“The data we possess has enabled us to identify customers who are not paying their taxes,” he stated. “That data is currently employed to identify customers with 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 differs from what is commonly believed. Revenue evasion is rendered more challenging by the revenue agency’s ability to monitor and analyze crypto activity.
Study Reveals Growing Appetite for Digital Assets in NZ
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% admitted to possessing cryptocurrency either currently or in the past. This represents an increase from the 10% that was reported in 2022.
Furthermore, nearly half of the respondents (45%) contemplate the possibility of cryptocurrency investing.
Andrew Bayly, the Commerce Minister of New Zealand, urged the government to provide additional support to the crypto industry in April.
He expressed his apprehensions regarding the sluggish adoption of cryptocurrency and advocated for a regulatory overhaul to establish a more conducive environment for the sector’s continued expansion.