New Zealand: It is Legal to Pay Salaries in Crypto
August 13, 2019 12:30 am
The Inland Revenue Department (IRD) (New Zealand’s tax office) has made it legal to pay salaries in digital currencies and it can be taxed accordingly. The agency published a report where it claimed under the Income Tax Act (to section RD 3) that an employee can be paid his salaries using cryptocurrencies as long as the payments are for services performed under an employee contract. This will be a fixed amount and it forms a regular part of the employee’s remuneration.
The IRD stated that the digital currencies must be paid and should be exchanged for fiat currency. At least it must have a primary purpose of acting such as a currency or it should be pegged to the price of other fiat currencies.
These digital assets are provided as shares for income purposes. They will be received under an employee share scheme. The salaries paid in cryptos will be considered as PAYE (pay as you earn) income payments. The tax amount will be deducted and passed to the tax department by the employer.
Susan Price, the agency’s director of public rulings signed the new ruling on June 27 and it is said that the rule will be applied for the next three years starting from September 1, 2019.