Government introduces crypto-asset reporting rules

The New Zealand Government has introduced the omnibus Taxation (Annual Rates for 2024-2025, Emergency Response, and Remedial Matters) Bill (Bill), which had its first reading on 29 August 2024. The Bill makes a number of policy changes and remedial amendments.

Of particular interest to those operating in the crypto-asset industry will be the implementation of the OECD's new Crypto-Asset Reporting Framework and Amendments to the Common Reporting Standard (CARF).

The CARF requires reporting crypto-asset service providers to share transaction details with tax authorities that have implemented the rules. This framework aims to enhance transparency and address challenges posed by decentralised crypto transactions. To date there has been little governmental regulation of or visibility over such transactions, despite the value of crypto-assets and the number of transactions increasing exponentially in recent years.

If the Bill is enacted as drafted then the new regulations for crypto-asset reporting under the CARF will take effect in New Zealand on 1 April 2026.

From this date New Zealand-based reporting crypto-asset service providers will need to collect transaction information for reportable users. This data must be reported to Inland Revenue by 30 June 2027 (in respect of the year beginning 1 April 2026). Inland Revenue will then exchange this information with relevant international tax authorities by 30 September 2027.

Reporting crypto-asset service providers will need to comply with CARF, including by adopting self-certification and due diligence procedures, undertaking the necessary reporting, and keeping the necessary records. This will potentially require significant changes to the policies and procedures that providers currently follow and the ways in which they interact with customers.

This alert was written by Daniel McLaughlin, a Special Counsel in our Private Wealth team.