It is now legal in New Zealand to receive salaries in cryptocurrency, including paying taxes. This is what is stated in an official bulletin of the national tax office, the Inland Revenue Department (IRD), published last week.
The bulletin is 67 pages long, and also covers other topics, all of which are related to taxation.
On page 3 there is the section BR Pub 19/01, explicitly dedicated to wages and salaries paid in cryptocurrencies.
This is a public ruling issued under Act 91D of the Tax Administration Act 1994 and refers to the Income Tax Act of 2007. The section deals with the payment of the remuneration of employees’ salaries in crypto-assets, in the event that the services are provided by the employee under an employment contract, have a fixed amount and form an integral part of the employee’s remuneration.
In fact, as stated in the bulletin, “a significant purpose of the crypto-asset is to function like a currency“.
The important aspect, according to the IRD, is that the crypto-asset with which the payment takes place is tradable for fiat currency, or that it is anchored to the value of one or more fiat currencies.
The bulletin also specifies how taxation should be applied to these payments, and states that these rules will officially enter into force from September 1st, 2019.
In fact, the aforementioned ruling considers the tax treatment of employees’ income received in crypto-asset as part of their regular remuneration, i.e. on a par with that paid in fiat currency. In addition, the bulletin reports that in New Zealand it is becoming increasingly common for employees, especially those working in crypto companies, to receive payments of salaries in crypto-assets, and thus provides information on how they should be paid and taxed.
“Crypto-assets can also have many of the characteristics of money; for example, the types of crypto-assets covered by this Ruling are readily transferable mediums of exchange, divisible, fungible, durable and hard to counterfeit“.
However, just afterwards it is stated:
“Crypto-assets are not “money” as commonly understood (at least not at the present time). In particular, because crypto-assets are not issued by any government, they are not legal tender anywhere. Further, although acceptance of certain crypto-assets as payment for goods and services is increasing, they are not “generally accepted” as payment. Given the extreme volatility experienced to date, there are also issues around some crypto-assets’ ability to be a store of value“.
In New Zealand, these new technologies have been under study for some time, so much so that already today the country could be considered as crypto-friendly.