New Zealand’s tax office recently published an updated ruling to its Income Tax Act. For the first time in the country’s history, salaries can be paid in something other than the country’s native fiat currency— cryptocurrency.
How Salaries Can Now be Paid with Cryptocurrencies in New Zealand
Up until a short time ago, New Zealand law restricted salaries to be payable through the New Zealand Dollar.
A new ruling has changed that however, effectively allowing salaries to be paid in cryptocurrency.
The Inland Revenue Department (IRD), New Zealand’s official tax body, has published updates regarding its Income Tax Act.
The updates reveal that employees can now be paid salaries in the form of crypto assets so long as the assets meet certain criteria.
Payments must be made for services performed under an employment contract, for a fixed amount, and must be a regular part of the employee’s remuneration.
In addition, the asset has to be eligible for exchange with fiat currency and must have the primary purpose of a currency or be pegged to one or more fiat currencies.
Cryptocurrency salaries will still be treated as taxable income, which fall under the country’s Pay As You Earn (PAYE) income payment structure.
The new ruling will be in effect for a total of three years, starting September 1st 2019.
Beyond New Zealand, a growing number of regulatory bodies have become involved in the digital asset space.
In Singapore, for example, the Inland Revenue Authority of Singapore (IRAS) plans to exempt cryptocurrencies from the country’s the goods and services tax (GST).
In May, the United States’ Internal Revenue Service (IRS) said it would publish updated digital asset tax guidance for the first time since 2014. The announcement came after 21 U.S. congress members petitioned the IRS for clarification on crypto tax regulations.
What do you think about New Zealand allowing salaries to be paid with cryptocurrencies? What does this say about the state of government agency intervention and digital assets? Let us know what you think in the comments section below.
Image courtesy of the IRD.