Why IRD is Looking More Closely at Your Crypto Transactions
Cryptocurrency has become an increasingly popular investment for New Zealanders over the past decade. Whether you’ve invested in Bitcoin, Ethereum, Solana or other digital assets, it’s important to understand that while crypto may seem different from traditional investments, it is not outside the reach of the IRD.
In fact, IRD has significantly increased its focus on cryptocurrency compliance, and many investors are now receiving letters requesting information about their crypto activities. If you’ve traded, exchanged or earned cryptocurrency and haven’t considered the tax implications, now is the time to review your position.
Why is IRD contacting crypto investors?
In April 2026, IRD announced that it had identified approximately 355,000 New Zealanders who have undertaken around 57 million cryptocurrency transactions worth an estimated $36 billion. Using information supplied by local and overseas cryptocurrency exchanges, IRD is actively identifying taxpayers who may not have correctly declared their crypto income.
Letters are being sent to investors reminding them of their tax obligations and encouraging them to voluntarily review previous tax returns before IRD commences more detailed investigations. For many taxpayers, these letters are simply an opportunity to get their affairs in order. However, failing to respond appropriately could result in additional tax, use-of-money interest and shortfall penalties.
Crypto isn’t tax-free in New Zealand
A common misconception is that cryptocurrency profits are tax-free because New Zealand does not have a general capital gains tax.
Unfortunately, this is not how IRD views cryptoassets.
For tax purposes, cryptocurrency is treated as property, not currency. In many situations, profits made from buying, selling, trading or exchanging cryptoassets are taxable income. Even swapping one cryptocurrency for another can create a taxable event, despite no cash changing hands.
Other taxable crypto activities can include:
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- Trading cryptocurrencies
- Swapping one cryptoasset for another
- Receiving staking rewards
- Mining cryptocurrency
- Receiving crypto as payment for goods or services
- Certain airdrops and token rewards
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Each transaction should be converted into New Zealand dollars at the time it occurs so that taxable income can be correctly calculated. Good record keeping is essential.
New reporting rules mean greater transparency
One of the biggest changes affecting cryptocurrency investors is the introduction of the Crypto-Asset Reporting Framework (CARF).
From 1 April 2026, New Zealand-based crypto service providers are required to collect detailed customer information and report transaction data to IRD. The first reporting period has already begun, with the first reports due in June 2027. The framework also enables information sharing between participating countries, meaning overseas cryptocurrency exchanges may also report information relating to New Zealand tax residents.
This represents a significant shift in IRD’s ability to verify taxpayer disclosures. Historically, cryptocurrency transactions were difficult for tax authorities to track. Today, that is rapidly changing.
What happens if you haven’t declared your crypto income?
Many investors simply didn’t realise their crypto transactions could be taxable. Others have struggled to keep adequate records across multiple exchanges and wallets.
IRD recognises that mistakes can happen, but voluntary disclosure is generally viewed much more favourably than waiting for an audit or investigation.
If IRD identifies undeclared income, taxpayers may face:
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- Additional income tax assessments
- Use-of-money interest
- Shortfall penalties
- Increased scrutiny of future tax returns
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The sooner any issues are identified and corrected, the more options are generally available to minimise penalties.
What should crypto investors do now?
If you’ve bought, sold or traded cryptocurrency over the past few years, now is an excellent time to review your position.
Consider the following steps:
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- Gather transaction histories from all exchanges and wallets.
- Review whether crypto-to-crypto trades have been included in your calculations.
- Check whether previous tax returns correctly disclosed any taxable gains or income.
- Ask your accountant if your records are incomplete or if you’re unsure how the rules apply.
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Many investors are surprised to discover that hundreds or even thousands of individual transactions may need to be analysed before taxable income can be determined accurately.