Inland Revenue: Focus On Cryptoassets

Inland Revenue is honing in on customers who are actively dealing in cryptoassets but not declaring income from them in their tax returns.

Cryptoassets, also known as cryptocurrencies or virtual currencies, are treated as a form of property for tax purposes. What people make from selling, trading or exchanging cryptoassets is taxable.

In 2020, IR updated its guidance on the tax treatment of cryptoassets in New Zealand. Then late last year we wrote to a group of high-risk customers and gave them the chance to fix any non-compliance issues before facing audit.

Inland Revenue spokesperson Trevor Jeffries says IR has just sent another round of letters.

“Data we have has helped us identify customers who are not paying their tax. That data is also now being used to identify customers with significant cryptoassets.

“Inland Revenue has identified 227,000 unique cryptoasset users in New Zealand undertaking around 7 million transactions with a value of $7.8 billion.

“Cryptoasset values have reached new highs, so now is a good time for people to think seriously about tax on their cryptoasset activity. The high value also means customers are well positioned to pay their tax for the 2024 tax year and earlier.

“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.

“To help with that, IR provides extensive guidance to help customers assess their situation. Where necessary, people can also seek advice from an independent tax advisor.

“We want customers and tax agents to know that we are stepping up our compliance activities for customers with cryptoassets. Despite popular thinking – people are not invisible on blockchain, and we have the tools and the analytics capabilities to identify and expose cryptoasset activities.

“We are applying those analytics capabilities and using data received from exchanges, both here and overseas. IR has signed up to the cryptoasset reporting framework. That means New Zealand works closely with other tax jurisdictions and will get more data on customers’ cryptoasset transactions outside New Zealand.”

There is more information at https://www.ird.govt.nz/cryptoassets.

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