The Crypto-Asset Reporting Framework (Carf), a new international standard, takes effect from April 1 next year. This will close a major gap in global tax transparency for crypto.
The Carf is the crypto cousin of the OECD’s Common Reporting Standard, which requires financial institutions to identify and share information about accounts held by foreign tax residents. This makes it far more difficult to hide assets offshore to evade taxes.
Until now, the major challenge has been the sheer volume of unreported offshore crypto activity. A recent IRD report revealed 80% of cryptocurrency transactions by New Zealanders occur on overseas trading platforms. The IRD simply couldn’t access this data.
The scale of what’s been invisible is significant. The same IRD report identified 188,000 New Zealanders who traded $7.2 billion in cryptocurrencies through local exchanges alone between June 2024 and June 2025.
The market is highly concentrated, with just 1.5% of traders responsible for 79% of that total. As of June 30 this year, more than 150 high-value customers remained under review, with tens of millions of dollars in tax at risk.
According to its regulatory impact statement, the Carf could generate about $50 million in additional annual tax revenue for New Zealand.
How the Carf works
From April 1, New Zealand-based crypto service providers must begin collecting information on specified transactions. By June 30 of 2027, that data goes to the IRD.
Crypto-asset service providers report trades to their own country’s tax authority. Those authorities then share the data automatically with others in participating OECD countries.
So, IRD will receive information from local providers about trades executed on their own platforms, and about offshore trades through international data-sharing.
The Carf captures three key transaction types:
• crypto-to-local-currency exchanges: converting your crypto into New Zealand dollars or your New Zealand dollars into crypto triggers a report
• crypto-to-crypto trades: swapping one digital asset for another (for example, Ethereum for a stablecoin) gets captured too
• significant transfers: moving crypto assets from one wallet to another.
Service providers – exchanges, brokers and crypto wallet operators – will collect your name, address, date of birth and tax identification number, then report your transaction data.
That information flows to the IRD, then to tax authorities in other Carf countries. Meanwhile, New Zealand receives data on foreign investors using local platforms.
The effect is simple: crypto transactions become as visible to tax authorities as your bank account and share portfolio.
Understanding your obligations
The core rules have not changed. The IRD treats cryptocurrency as property, not currency. Every realised capital gain from crypto activities creates a potential tax liability.
Selling for cash, trading for another token, or using crypto to buy a car all count as taxable events. Your gain – the difference between the sale price and the cost price of your crypto – is treated as taxable income.
For example, suppose you buy a fraction of one Bitcoin for $10,000 and later sell it for $15,000. The $5000 gain counts as taxable income. At a 33% tax rate, you would owe $1650.
However, crypto’s volatility can also work to your advantage through a strategy called tax-loss harvesting. When you sell an asset for less than you paid, the resulting loss can generally be deducted from other taxable gains or income, lowering your overall tax bill.
So, if you sold that Bitcoin for $9000 instead of $15,000, your $1000 loss is deducted from other taxable income. At a 33% tax rate, your tax bill drops by $330.
The price of getting it wrong
The IRD doesn’t distinguish much between deliberate evasion and sloppy record-keeping.
Deliberate tax evasion can attract penalties of up to 150% of the unpaid tax. In extreme cases, it can lead to criminal prosecution and imprisonment.
Even honest mistakes are expensive. The IRD can charge use-of-money interest on unpaid tax from the day it was due. Penalties for lack of reasonable care range from 20% to 40% of the amount of tax you should have paid but didn’t.
The burden falls entirely on investors. They need to keep records of the date, type, amount and dollar value for every crypto trade, transfer and disposal.
Every transaction and swap counts. Investors will need to estimate what they will owe and set aside funds in a dedicated tax account.
If those records are incomplete or non-existent, there is only a narrow window to fix it. The 2026-27 income year is closer than it seems, and when Carf takes effect, the IRD will finally see everything.
