New Zealand’s government proposed the adoption of the Organisation for Economic Co-operation and Development (OECD) Crypto-Asset Reporting Framework (CARF) on 26 August 2024. The move is intended to enhance the transparency of crypto transactions in the country.
Simon Watts, New Zealand’s Minister of Revenue, introduced the bill titled “Taxation (Annual Rates for 2024–25, Emergency Response, and Remedial Measures).”
The bill outlines several key initiatives. It includes the confirmation of annual income tax rates, tax relief measures, and crucially, the implementation of the OECD’s CARF alongside amendments to the Common Reporting Standard (CRS).
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RCASPs Will be Required To Collect User Info
Under the proposed legislation, Reporting Crypto-Asset Service Providers (RCASPs) in New Zealand will be required to begin collecting information on users operating through their platforms starting April 2026.
The collected data must be reported to New Zealand’s Inland Revenue by June 2027.
The information will then be shared with relevant tax authorities in other jurisdictions by September 2027. This will ensure a global reach in monitoring crypto-related income.
#New Zealand's Minister of Revenue introduced a bill to implement the #OECD's #Crypto-Asset Reporting Framework (#CARF), requiring crypto service providers to report user data to tax authorities.
Noncompliance could result in fines ranging from $12,000 to $62,000. The new… pic.twitter.com/90HdoX7Ms6
— TOBTC (@_TOBTC) August 27, 2024
The move is aimed at addressing the growing concern among tax authorities worldwide regarding the lack of visibility over income derived from cryptocurrency trading.
The Inland Revenue Department emphasized that as the crypto market continues to expand. Hence, it is essential for tax authorities to maintain oversight of income and investment opportunities facilitated by large-scale intermediaries.
By requiring detailed reporting, the government aims to ensure that profits from crypto transactions are properly taxed.
The proposed framework also includes penalties for non-compliance. RCASPs that fail to meet the reporting requirements could face fines of 300 New Zealand dollars (approximately $186) for each instance of non-compliance, with penalties capped at 10,000 NZD ($6,200).
However, if non-compliance is due to factors beyond the control of the service provider, penalties may be waived.
Conversely, service providers that do not take “reasonable care” to adhere to CARF requirements could face more severe fines ranging from 20,000 to 100,000 NZD ($12,000 to $62,000).
Users who fail to provide the necessary information for compliance could also be fined up to 1,000 NZD ($621).
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New Zealand Increases Efforts to Regulate Crypto Sector
The recent proposal aligns with New Zealand’s broader efforts to increase surveillance and regulation of the crypto sector.
The country’s finance watchdog issued several warnings against crypto fraudsters and impersonators. The regulator previously flagged Krypto Security and Bay Exchange, which have been contacting citizens to offer access to cryptocurrency services.
Recently, the Financial Markets Authority (FMA) flagged an unlicensed crypto exchange clone of BTCSWE. The impersonator has been reportedly contacting customers, promising to retrieve funds lost in previous unsuccessful investments.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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