The Inland Revenue Department is asking cryptocurrency companies to hand over their clients’ personal details as well as their digital currency holdings for tax payment purposes. The New Zealand tax agency claims that this kind of data sharing will increase their understanding of crypto assets in New Zealand, “so we can work out how best to help taxpayers meet their income tax obligations.”
Janine Grainger, co-founder of New Zealand-based crypto exchange Easy Crypto, showed displeasure towards this move, as crypto firms worry about their clients’ privacy. “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,” she said.
Grainger argued that privacy does far more than just protect the guilty. “While many people might think, ‘I have nothing to hide, therefore what do I care?’ the point of privacy isn’t to aid people who have something to hide, it’s to ensure we have a fair, open, and free society,” she said.
IRD’s request for data access comes as other countries are making similar moves. The U.S. Internal Revenue Service has begun sending warning letters to crypto investors, insisting that they correctly report their transactions.
IRD announced guidance in September to explain how crypto assets will be taxed. This guidance will enable crypto investors to identify their tax payable amount, depending on the asset category they fall into.