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New Zealand’s tax office is concerned about the Crypto Market

New Zealand’s tax office is concerned about the Crypto Market

Quick Take

3 minute read

  • New Zealand’s tax regulator demands local crypto companies revealing the personal details of the customers and submitting this information on their client’s digital asset usage.
  • From now on IRD will be in charge of the Kiwi cryptocurrency market, making the local companies report the value of their customers’ crypto assets.

New Zealand’s tax regulator, Inland Revenue Department (IRD) demands local crypto companies revealing the personal details of the customers and submitting this information on their client’s digital asset usage. From now on IRD will be in charge of the Kiwi cryptocurrency market, making the local crypto companies report the type and the value of their customers’ crypto assets.

As RNZ News states, the main reason for taking the risky step of asking for the customer details and probing crypto-currency investors in enhancing New Zealand's awareness about the cryptocurrency industry which is important for the taxpayers to meet their income tax obligations. New regulation caused huge dissatisfaction from the clients as personal information is something important for everyone who is engaged in the crypto market but as IRD officials say, they are concerned about the privacy issues which is why they are still working on the plan.

However, according to the Tax Information Bulletin, only the settlements with hired employees are permitted to crypto salaries and not the freelanced taxpayers. Though crypto payments are licensed as a part of paid services done under an employment agreement and the prices of them remain fixed.

How demanding may it sound, this news isn’t surprising for any real crypto enthusiast. Everybody knows that if crypto is to become a staple in the modern world we are going to have to pay taxes on it. It’s been a long time since IRC considered cryptocurrency as its property, making taxpayers report transactions that involve virtual currencies like US dollars on their tax returns. Let's take a look at the original financial regulation for a second and see what other "financial service providers" have to do for the government to be approved.

Based on several forex company overviews, especially the NessFX review due to its controversy in the past, we can see that the government is very closely tied to the information that these companies gather. This prevents fraud not only from the investor's side but on the company's side as well. And if there's one thing we know it's that crypto is ripe with frauds these days. NessFX is one of the online trading platforms that doesn’t have a good reputation. It has a pretty rough history and is considered a dangerous platform or even as a scam for forex traders, as they don’t have enough tools and regulations to keep their customers safe and secure, which is why it is not on the list of the recommended forex brokers. Therefore, we can conclude that some of the regulations from the government are important for avoiding fraud and this can be the reason for the justification of IRD for demanding some of the personal data.

It’s important to note that the Inland Revenue Department is not the only one who demands submitting information on digital asset taxation. The US tax authority, Internal Revenue Service (IRS) is also involved in making regulations on the crypto industry as it demands the citizens of New Zealand to note any interaction with the asset class.

How crypto assets will be taxed?

IRD openly aims to improve the way ordinary tax rules connect to crypto-assets, planning to make people understand their tax obligations. In his way, the customers will be aware of what tax they need to pay when they trade, swap, or sell cryptocurrencies. According to IRD’s new guidance, now people can understand the expenses and income of their crypto assets, they can calculate the NZD value of their assets and keep important information on the records. This new guidance was provided because the officials of IRD believe that cryptocurrency needs its own specific tax rules to make it easier to observe.

So, if you used bitcoin or other cryptocurrencies in any way last year, it doesn't matter by selling it or using it to buy something online, then you are responsible for paying taxes and your gain can be taxed at different rates. But you don’t have to pay anything if you just bought and held them last year. But if you are considering not paying your crypto taxes at all, as the Blockchain and crypto transactions, in general, is anonymous and decentralized by nature, you are making a mistake because now the government can track who is making money trading or selling cryptocurrencies. This is why the news seems so unpleasant for the people who are trying to get rid of the government taxes by hiding their personal information, meaning that IRD’s initiative can bring some safety to the crypto market.

© 2020 CryptoDaily All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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