New Zealand's tax authorities have identified over 200,000 citizens who failed to declare cryptocurrency income. They are in trouble now.
The Inland Revenue Department (IRD) is reminding investors that virtual assets are taxable. It plans to intensify efforts to track non-disclosure of digital asset earnings.
The IRD is targeting taxpayers actively dealing in cryptocurrencies without reporting income.
Just to remind you, in 2020, New Zealand updated its guidelines on digital assets, and cryptocurrencies are now treated as property for tax purposes. If you make profit with your crypto investments, the state would like to get its share.
The new rules make digital assets and mining income taxable under specific conditions. The IRD has identified 227,000 unique crypto users in New Zealand. These users conducted over 7 million transactions, according to the latest reports.
The total value of these transactions is estimated at NZD 7.8 billion (approximately $4.77 billion).
Detailed analysis of this data has helped the IRD identify non-compliant taxpayers and those with significant holdings, and of course, those who are profitting and not sharing with the authorities for whatever reason, intentionally or not.
Trevor Jeffries, an IRD spokesperson, commented on the situation. "Cryptoasset values have reached new highs," he said. "Now is a good time for people to think seriously about tax on their cryptoasset activity."
Jeffries urged investors to consider their tax obligations. He emphasized the risks of not declaring all taxable activities. The IRD has provided extensive guidance on crypto taxes.
Last year, the department notified high-risk customers. It allowed them to address non-compliance issues before facing an audit. The IRD has now sent a new round of letters to non-compliant crypto investors.
Jeffries stated that the IRD is intensifying its compliance activities. "We have the tools and analytics capabilities to identify and expose cryptoasset activities," he warned.
The IRD is collaborating with domestic and overseas exchanges to gather information about crypto investors. It is also working with other tax jurisdictions to obtain data on transactions outside New Zealand. Simply put, the authorities want to know more about cryptolife of the new zealanders online.
New Zealand's crypto regulations remain largely undeveloped. However, Commerce Minister Andrew Bayly suggests a more proactive approach.