Tax season is upon us, and it's crucial to remember that your cryptocurrency trading activities are taxable! Whether you're trading, selling, or exchanging cryptocurrencies, the Inland Revenue Department (IRD) considers these actions taxable.
-- Do I have to declare it?
Absolutely! Being honest and transparent in declaring your crypto activities isn't just a legal requirement, it's a cornerstone of a fair and just tax system. While the decentralized and anonymous nature of crypto trading can make it difficult to trace transactions, this complexity also emphasizes the importance of maintaining detailed records and seeking professional guidance. The ever-evolving world of cryptocurrencies makes it all the more crucial to stay on top of your tax obligations. So, keep meticulous records, be transparent, and ensure compliance. Your integrity supports a balanced tax system for our society.
CARF is a global initiative led by the OECD (Organisation for Economic Co-operation and Development) Global Forum on Transparency and Exchange of Information for Tax Purposes. It aims to promote the automatic exchange of information between countries to tackle emerging tax evasion risks related to crypto-assets and digital assets.
--What Does It Mean for Cryptocurrency Owners?
With the implementation of CARF, it's more important than ever for crypto holders to declare their trading activities. The new regulations will require crypto-asset service providers to collect and report information on reportable users, ensuring greater transparency and compliance. This means any income from trading, selling, or exchanging cryptocurrencies is taxable.
Now is the time for taxpayers to review their tax obligations. Properly declaring crypto trading can help avoid potential audits and penalties, ensuring compliance with tax laws.
-- What do you need to do?
-- Calculate your crypto gains and losses: Determine the New Zealand dollar value of your crypto transactions. This includes income from selling, trading, or exchanging cryptocurrencies, as well as any expenses related to your crypto activities.
-- To ensure accurate reporting with the IRD, cryptocurrency holders and investors should keep records of the following:
· The dates of their transactions
· The type of transactions (buy or sell)
· Details related to staking or lending income
· The types of cryptocurrencies held
· The total number of units they have
· The value of crypto assets at the time of the transaction, in NZD
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