Crypto crackdown: IRD says it can track down overseas data and crypto assets

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

Crypto assets or crypto currencies were treated as a form of property for tax purposes.

“What people make from selling, trading or exchanging crypto assets is taxable,” the IRD said today.

It said in late 2023 it wrote to a group of high-risk customers and gave them the chance to fix any non-compliance issues before facing audit.

“Data we have has helped us identify customers who are not paying their tax,” Inland Revenue spokesman Trevor Jeffries said.

The tax department was now using that data to identify customers with significant crypto assets.

“Inland Revenue has identified 227,000 unique crypto asset users in New Zealand undertaking around seven million transactions with a value of $7.8 billion,” Jeffries said.

“Cryptoasset values have reached new highs, so now is a good time for people to think seriously about tax on their cryptoasset activity.”

The IRD said those high values meant customers were well-placed to pay their tax for the 2024 tax year and earlier.

”Despite popular thinking, people are not invisible on blockchain and we have the tools and the analytics capabilities to identify and expose crypto-asset activities.”

Inland Revenue said it would apply analytics capabilities and use data received from exchanges in New Zealand and overseas.

The IRD said it was part of a crypto asset reporting framework enabling New Zealand to work with other tax jurisdictions.

That meant the IRD could track down data on customers’ crypto asset transactions outside New Zealand.

“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,” Jeffries added.

The IRD said where necessary, people could seek advice from independent tax advisors.