Crypto’s “Wild West” reputation fuels a persistent myth: the IRD can’t track my trading, so I don’t need to report it. Despite crypto’s decentralized, pseudonymous nature, this couldn’t be further from the truth. The IRD has sharpened its tools to enforce tax compliance.
Below are some examples of what we’re noticing about IRD and what’s to come.
Centralized Exchanges: Platforms like Easy Crypto, Binance and Coinbase enforce KYC, tying your identity to trades and wallet activity. The IRD likely already has your transaction data. We have many new clients who contact us after receiving a letter from Inland Revenue, who have already obtained cryptocurrency information from the centralised exchanges.
Blockchain Analytics: Public ledgers record every transaction. Tools like Chainalysis can trace crypto back to you, even to personal wallets.
Global Cooperation: Through the OECD’s Crypto-Asset Reporting Framework (CARF), adopted by over 50 countries, the IRD will be able to access your offshore trading data. This legislation is set to come into effect on 1 January 2026.
Audits & Warnings: The IRD targets high-risk taxpayers with audits, backed by data they’ve already collected. We’re noticing that they are stepping up this activity.
IRD have mentioned “We are seeing the outcomes from our increased focus on compliance activities, with more than 5,100 audits opened in 2024 compared to 4,200 in 2023. In 2024 we closed 4,300 audits, assessing $460 million in additional tax, an increase from 3,600 audits and $397 million in additional tax in 2023”
Consequences of Dodging Tax
Ignoring crypto tax obligations can lead to:
Penalties up to 150% of unpaid tax, plus 8% annual interest.
Fines up to $50,000 and jail time of up to five years for evasion.
Audits spanning years—or indefinitely if fraud’s suspected—supported by the IRD’s broad investigative powers.
The IRD’s reach is growing. Assuming your crypto profits are invisible is a costly gamble.
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Contact Us
Contact Tim Doyle for a call or meeting to discuss any cryptocurrency tax or accounting questions. Our office is in Cambridge, Waikato, or we can arrange a video conference call.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
