What you need to know about crypto and foreign account reporting
Crypto assets are becoming far more visible to tax authorities. With CARF coming into force soon, now is the time for investors and platforms to understand their reporting and tax obligations.”
— Stephen Tsang, Director, PKF Withers Tsang
Introduction
If you are involved with a financial institution, or hold cryptocurrency in New Zealand or offshore, there are some important changes on the horizon. Two key developments are underway: the introduction of the Crypto-Asset Reporting Framework (CARF) and updates to the Common Reporting Standard (CRS).
These changes are coming soon. Below is a clear overview of what’s changing and what it may mean for you, so you can be prepared.
What is CARF?
CARF stands for the Crypto-Asset Reporting Framework. It is a new global framework developed by the OECD (Organisation for Economic Co-operation and Development) to strengthen the reporting of crypto-asset transactions for tax purposes.
Unlike traditional assets such as cash or shares, crypto assets (for example Bitcoin and Ethereum) can be transferred without involving banks or other regulated financial institutions. CARF is designed to address this gap by requiring crypto service providers to collect and report information about users and transactions.
How will CARF work in New Zealand?
Inland Revenue (IRD) has adopted the OECD’s CARF model rules. In practice, this means:
Crypto service providers
Platforms dealing in crypto assets — including exchanges and wallet providers — will be required to:
- verify customer identities,
- collect prescribed information, and
- report relevant transactions to IRD.
Account holders
Individuals and entities using these platforms should expect increased information requests and reporting requirements relating to their crypto holdings and transactions.
Timing
New Zealand-based reporting crypto service providers will begin collecting information from 1 April 2026. This information will be reported to IRD by 30 June 2027.
The information collected will allow IRD to cross check that crypto-related income is being correctly reported and taxed in New Zealand.
What’s new with CRS?
The Common Reporting Standard (CRS) has been in place since 2017 and enables countries to automatically exchange financial account information. Its purpose is to protect national tax bases and reduce tax avoidance involving offshore accounts.
CRS rules have recently been revised, expanding their scope to capture a broader range of assets. This now includes certain indirect investments in crypto assets, such as those held through derivatives and other investment vehicles that are not already covered by CARF.
Wrapping up
As New Zealand implements these updated global reporting standards, both CARF and CRS will change how crypto assets and financial accounts are monitored domestically and internationally. We will continue to share updates as further guidance is released by IRD.
This is also a timely reminder that gains from selling, trading, or exchanging cryptocurrency are generally treated as taxable income in New Zealand.
Like gold bullion, crypto assets are treated as personal property for tax purposes. In most cases, profits from their disposal are subject to income tax at your personal marginal tax rate.
If you have any questions about how these changes may affect you, please contact one of our client managers.