New Zealand Tax Office Approves the Payment of Salaries in Crypto
Some countries and industries are beginning to have a changed heart towards the use and adoption of cryptocurrency.
A few days ago, it was announced that China who has been frowning at the opinion of using or accepting crypto has just announced the development of its cryptocurrency, Digital renminbi.
Previously in New Zealand, according to New Zealand law, salaries were only payable in fiat currency, NZD.
Although, a new ruling which was signed on the 27th June says that New Zealand’s tax office, the Inland Revenue Department (IRD), has just approved the payment of salaries in Cryptocurrency and would be taxed accordingly.
IRD released a bulletin on August 7th stating that the new ruling made under the Income Tax Act (under section RD 3) now approved employees to receive salaries in crypto assets that can be exchanged for fiat currency as long as the payments are for services carried out under an employment contract.
However, the crypto asset should be fixed to the price of one or more fiat currencies and must have the primary purpose of acting as a currency. These crypto-assets can be used as shares for income tax purposes which would be received under an employee share scheme and the ruling does not apply here, states IRD.
Salaries remunerated via crypto assets will now be treated as PAYE (pay as you earn) income payments. These would be deducted by the employer and passed onto the tax department.
This new ruling signed by the agency’s director of public rulings,- Susan Price will be effective for three years beginning from September 1, 2019.