The Inland Revenue Department (IRD) has put NZ cryptocurrency traders on notice after an information-gathering sweep uncovered transactions valued at almost $8 billion.
In a release, IRD significant enterprises segment lead, Tony Morris, said the tax department found 227,000 crypto-users in NZ had completed about 7 million transactions valued at $7.8 billion.
Crypto profits are taxable in NZ but compliance is likely light in the relatively new sphere that often touts anonymity as a feature.
However, Morris said the IRD is “approaching the largest traders individually” to pursue tax claims.
“But because there is still confusion about what the obligations are, we’re planning a wider campaign for smaller traders,” he said.
“And like property, we’re starting to target our debt collection at people who we know own enough crypto assets to pay their debts.”
The crypto crackdown comes amid a tougher policing stance from the tax department, which received an extra $29 million in funding in the latest budget, earmarked for compliance.
In August this year, the IRD also red-flagged online platform share-traders for further scrutiny in a draft interpretation statement.
“Most people understand that share traders or dealers who buy shares for resale need to pay tax, but it is not so well understood that people who make only occasional sales also have to pay tax, if those shares were bought for the purpose of resale,” the statement says.
According to a spokesperson, the IRD was actively pursuing share-traders for tax breaches.
“Monitoring is ongoing and we do not have any updates to share while the work is still happening,” the spokesperson said.
The IRD was also making better use of databases to identify potential tax evasion via property, trusts and companies, Morris said.
For example, the tax authority found about 3,500 people with “very large distributions” from trusts while possibly over-claiming Working for Families benefits.
As well, he said the IRD was now tapping into eftpos data to “target enforcement activity”.
“Clearly the ongoing collection and use of data, from both public and private sector organisations, is not going away. In the short-term, we’ll continue to bring in new datasets that help us target specific risks we’re concerned about,” Morris said.
“We’ll continue to use data to get a complete picture of each customers’ ownership of entities and financial interests.
“And we’ll continue to extend the use of the data we’re already gathering.”