1. Diverting Personal Services Income
 

IRD is revisiting a revenue alert from March 2021 regarding income diversion through related entities, such as trading trusts or companies. This scrutiny aims to prevent tax avoidance. When assessing shareholder salaries at year-end, IRD will adhere to these guidelines to ensure accurate income reporting and compliance.

2. Taxation of Cryptocurrency
 

Cryptocurrency remains a significant focus for IRD, with clear guidelines now in place:

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• Tax Treatment: Cryptocurrency is subject to Income Tax at marginal personal income tax rates. The IRD tracks crypto transactions by requesting data from crypto exchanges. Despite the perception of anonymity, centralised exchanges require personal details and thus facilitate IRD's monitoring of crypto activities.

• Disclosure of Transactions: The IRD has started requiring crypto exchanges to share customer and transaction data, which may include wallet addresses. If you've used centralised exchanges, it’s likely that your transactions are already known to the IRD.

• Taxable Events: Profit from crypto asset disposals—whether through sales, trades, spending, gifting, or lending—is taxable. Additionally, acquiring crypto through mining rewards or airdrops may also be subject to tax, especially if these are considered business income or part of a profit-making scheme.

• Tracking and Reporting: Using crypto tracking apps can help you monitor profits and losses for accurate reporting to IRD. It’s advisable to organise this tracking now if you haven’t already.

3. Land Transactions

 

IRD's interest in land transactions persists. The department is not only examining compliance with bright-line rules but also broader land taxation provisions. By analysing information from the land transfer office, IRD assesses the frequency and value of land transactions to determine potential tax liabilities.

4. Payroll and Site Visits
 

IRD has announced an increase in payroll audits and site visits, initially targeting the liquor industry. However, this is expected to extend to other sectors. Businesses will be given advance notice of any site visits, so it's essential to ensure payroll records are accurate and up-to-date.

Staying Informed and Up-to-date is Crucial

Staying informed and compliant with IRD's latest updates is crucial for avoiding potential penalties and ensuring proper tax practices. Whether it’s understanding the implications of cryptocurrency transactions, adhering to land tax regulations, or preparing for payroll audits, timely action and accurate reporting are key.

 

For personalised advice or clarification on how these updates impact you or your business, please contact us.