Crypto investors beware. The IRD is about to get a far better look at what you’re doing

Saturday, 21 March 2026

Research found that advice from friends and colleagues is cited as an important source of information for 85% of investors under the age of 35, and 61% of these investors also said they were using social media as a source for investment information.

New Zealand’s crypto investors might believe they’re operating in the shadows beyond the tentacles of government, but they could be in for a surprise come April.

Starting 1 April, Inland Revenue (IRD) will have a direct, automated pipeline of data from both local and international exchanges.

The introduction of the Crypto-Asset Reporting Framework (CARF) will mark a major shift in how the IRD monitors the purchase and sale of digital assets.

Once in effect, it will make your crypto investing as visible to the tax department as your standard bank account or KiwiSaver.

Under these new CARF regulations, crypto exchanges, brokers and some wallet providers must collect transaction data and tax residency information for users.

Identity details, transaction totals, transfers and high-value retail transactions will all become visible – serving as a reminder that crypto exchanges aren’t quite as opaque as users might imagine.

Data from the IRD shows 277,000 New Zealanders are invested in cryptocurrency, with 80% of that activity happening offshore, which has meant zero visibility for local tax authorities.

The IRD will soon be able to see what you hold both in New Zealand and abroad.

In New Zealand alone, the IRD was able to identify $7.2 billion in trading activity through local exchanges in one financial year.

Olena Onishchenko, a senior lecturer in finance at the University of Otago, noted earlier that a regulatory impact statement estimated these measures could deliver approximately $50 million in additional tax revenue for New Zealand.

The small print: the taxman is coming for your crypto gains.

What the taxman wants

Understanding your obligations under tax law will go a long way to ensuring you don’t end up with an expensive surprise.

Ian Fay, a tax partner at Deloitte, says if you realise a gain by selling cryptocurrency for a profit, you are liable for tax on that gain. This applies even if you then take that money and invest it directly into another crypto asset, which collapses shortly after.

In this scenario, you would not only lose money on your investment but also be liable for tax on the initial profit that you made.

Fay explains someone might buy bitcoin, which then goes up in value. They might then trade that bitcoin for another cryptocurrency (say ethereum).

The investor might assume that they didn’t cash in, so they can’t be taxed. But this is wrong. The moment you offload the bitcoin, it’s regarded as “a disposal event,” meaning you are liable for tax on any gains you made on bitcoin. Even if your ethereum investment later sinks to zero, you would still be liable for the tax on those bitcoin gains.

According to Fay, there aren’t any discrete rules for cryptocurrency taxation. Instead, it’s governed by the same rules that apply to something like gold investing.

The IRD uses what’s called “a dominant purpose” test – which says that if the main purpose of an investment is to sell it for a profit at a later stage, then every cent of profit you make on that sale is taxable.

Because bitcoin doesn’t earn dividends like shares, the IRD runs on the assumption that the “dominant purpose” is to sell the asset later at a profit.

Any profit you make is treated as income and added to your other annual earnings and taxed with your regular income tax bracket.

However, given many crypto investors are likely to suffer a loss in 2026 (based on the current numbers), most won’t be earning much income on their investments.

‘Very few understand the rules’

Rupert Carlyon, the founder of Kōura Wealth, notes that some investors think they need to invest directly into cryptocurrencies to take advantage of opportunities that might exist, but don’t have an in-depth understanding of the tax obligations they’re taking on.

He says a far easier way to invest is via an exchange-traded fund (ETF).

Kōura Wealth founder Rupert Carlyon says you don’t need to own crypto directly.

Most ETFs bought by the average person in New Zealand are likely to be registered as PIE Fund.

A PIE fund essentially wraps all your investments into a single portfolio, so you don’t need to do that hard work yourself.

It’s designed to make your tax life simple – and is often cheaper.

“Your tax will be capped at 28% and dealt with separately, so you don’t need to calculate yourself,” he says.

For an investor on a higher income bracket (for instance 39%), this approach could actually save them a significant amount.

KiwiSaver and managed funds are other good examples of PIE funds used in the local context.

“Some investors turn up their nose at the ETF or KiwiSaver options because they think they need to own their keys, but they don't understand the tax implications of doing it,” says Carlyon.

Unlike buying crypto directly, a PIE fund offers a hands-off alternative for an investor. Everything is calculated and sorted on your behalf.

The bottom line is that as New Zealanders become more active in the investing space, it’s important to keep track of your obligations.

Not doing so could lead to some awkward conversations with the IRD.

Do you invest directly in cryptocurrencies? Are you concerned about the tax implications? Let us know in the comments below.