New Zealand’s tax office, the Inland Revenue Department (IRD), has made it legal to receive salaries in cryptocurrency, and be taxed accordingly.
In its August bulletin, the agency published a new ruling under the Income Tax Act (in relation to section RD 3) that states that an employee can be paid salaries in crypto assets as long as the payments are for services performed under an employment contract, are for a fixed amount and form a regular part of the employee’s remuneration.
The crypto asset being paid must also be able to be exchanged for fiat currency, and must have the primary purpose of acting like a currency or be pegged to the price of one or more fiat currencies, the IRD states.
Crypto assets are provided as shares for income tax purposes and are received under an employee share scheme, the ruling does not apply.
As far as tax goes, salaries paid in crypto assets will be treated as PAYE (pay as you earn) income payments. These are deducted by the employer and passed onto the tax department.
The new ruling – signed on June 27 by the agency’s director of public rulings, Susan Price – will apply for three years from Sept. 1, 2019.
Previously under New Zealand law, salaries were only payable in “money,” effectively the New Zealand dollar.
New Zealand tax form image via Shutterstock