New Zealand’s tax authorities have seemingly got the green light to collect crypto investors’ information from local exchanges to see if they are paying their dues.
The agency, in New Zealand called the Inland Revenue Department (IRD), announced Monday that it asked all firms pass on customers’ personal details. It will be the first time the country’s IRD gain access to crypto traders’ data – information that includes trades, names and addresses, and the value and type of their crypto assets.
“IRD is requesting this information to enhance our understanding of the cryptoasset environment in New Zealand so we can work out how best to help taxpayers meet their income tax obligations,” it said in a statement.
Chief executive of Easy Crypto, Janine Grainger, told Radio New Zealand that she was disappointed by the request but it has no legal grounds to refuse the IRD order. She described the requirement to hand over customer’s personal information as “heartbreaking,” though.
“I guess [IRD] is just widening its net of the tax base and crypto assets are something that is definitely growing in popularity and we’re seeing a huge increase in New Zealanders getting involved. Privacy is really important to us… one of the tenets [of] cryptocurrency in general is around having freedom and autonomy and privacy,” she added.
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There are no specific rules for the income tax or treatment of cryptocurrency. But, in fact, the tax office sees digital assets as property rather than as forms of money. As a result, cryptocurrency investors may owe corporation tax, income tax, or capital gains tax depending on their activities and transaction type.
Australia also taxes crypto transactions
The move highlights how regulators around the world are not only concerned with combating cryptocurrency related crimes, but also chasing those who use the virtual asset to hide wealth or avoid paying taxes. This is nothing new, but a bit complicated as a booming market in 2017 and early 2018 made some crypto dealers millionaires virtually overnight while others lost their fortunes following the next years’ market-wide crash.
Under the current laws, crypto exchanges and other businesses serving as middlemen can provide the data on their clients voluntarily, but after the new instructions they will not be able to refuse or appeal the authorities’ requests to turn over information.
In its closest neighbor, the Australian Taxation Office also requires the nation’s cryptocurrency users to report their operations in order to verify tax compliance. Warning them of stiff penalties if they fail to report income or pay tax on crypto holdings, the ATO said earlier this year that over 350,000 individuals were expected to receive letters by mail or emails to “remind them” of their obligations.
Thousands of Australian taxpayers across the country have already received instructions on how to accurately report their cryptocurrency-related income and amend their tax returns, if necessary.