On Thursday, New Zealand's tax authority revealed that it targets individuals actively trading crypto who have yet to report their income from these transactions in tax filings.

The Inland Revenue Department (IRD) disclosed that it has identified 227,000 crypto users in the country who have engaged in about 7 million transactions, totaling NZ $7.8 billion (USD 4.7 billion).

Crypto Tax Compliance

Since 2018, the IRD has considered crypto like any other property for tax purposes. The IRD intends to tax all profits from buying, selling, or trading crypto.

Understand Your Crypto Tax Obligations, Warns NZ IRD

After giving a heads-up to potentially non-compliant crypto users in late 2020, the tax department has now sent out another round of warnings, according to IRD spokesperson Trevor Jeffries.

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

"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 department offers resources to help people understand their crypto tax obligations. He also emphasized that widespread misconceptions about anonymity on the blockchain are false. The tax agency has tools to track and analyze crypto activity, making tax evasion difficult.

Growing Appetite for Digital Assets

According to a poll, the number of people using crypto in New Zealand is increasing. A survey of over 1,000 respondents showed that 14% admit to owning crypto currently or in the past. This is 10% more than in 2022. Additionally, nearly half (45%) of those surveyed consider investing in crypto.

In April, New Zealand's Commerce Minister, Andrew Bayly, called on the government to support the crypto industry more. He expressed concerns about the slow crypto adoption and called for a refresh of regulations to create a more favorable environment for the sector's growth.

"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's recent actions underscore a significant shift in how governments worldwide approach digital assets. Understanding and complying with tax obligations becomes increasingly crucial as more people embrace cryptocurrencies.