It appears that tax authorities in New Zealand have received approval to begin collecting information about the users who are signed up on cryptocurrency exchanges. The aim of the office is to ensure that all these users are paying the appropriate amount of taxes associated with their transactions and there is no discrepancy. On Monday, an announcement was made by the New Zealand Inland Revenue Department (IRD). It highlighted that they had all crypto exchanges to share the personal details of their clientele. This is the first time in the history of the department that they would be getting access to data of cryptocurrency users.
The information that has been requested by the IRD includes names, addresses, all trades that have been executed, along with the value and type of crypto assets owned by these people. The IRD said in a statement that they were only asking for this information to improve their understanding of the crypto space in the country. It said that it would assist them in figuring out how they could help taxpayers in properly meeting and fulfilling their income tax obligations. Janine Grainger, the chief executive at Easy Crypto, spoke to Radio New Zealand regarding this matter.
She said that the request by the IRD had come off as highly disappointing. However, she also disclosed that they couldn’t refuse the order that had been issued on any legal grounds. But, she did add that the process of sharing personal information about their users with the department was ‘heartbreaking’. She noted that the IRD was just widening their tax base because the popularity of crypto assets is on the rise in the country. Janine also said that one of the fundamental features of crypto was privacy because it provides its users with freedom and autonomy, which is being compromised through this process.
There are no specific rules in New Zealand about the tax treatment relating to cryptocurrencies. However, the IRD is not considering these digital assets to be a form of money. Instead, they have classified crypto as a form of property. This means that crypto investors would have to pay income tax, corporation tax, capital gains tax and more, depending on the type of crypto transactions they make. This could certainly cause a great deal of confusion and could even halt the crypto adoption in the country because it would take away the profits associated with this investment vehicle.
Crypto users in Australia are also required by the Australian Tax Office to report all their crypto transactions for the purpose of tax compliance. The country’s citizens were issued a warning of strict penalties that would be applicable because of failure to report income via crypto investments or for not paying taxes on their crypto assets. Previously, the ATO had said that almost 350,000 individuals would be sent letters for reminding them of their tax obligations. Such regulations could dampen the interest in cryptocurrency in these countries because it takes away the anonymity offered by these digital assets.