In the August 2019 issue of the New Zealand Tax Information Bulletin (published by the Department of Internal Revenue), a new public decision integrates “crypto-assets” as legal and taxable forms of payment for employees. Thus, New Zealand becomes one of the first nation states to create an appropriate framework for employees to receive part of their wages in cryptocurrencies. It should be mentioned that the new provisions do not concern independent taxpayers and impose several conditions: cryptocurrencies must not be blocked and can be easily converted into fiat currencies.
According to New Zealand tax authorities, Bitcoin has all the features necessary to be considered a form of payment. However, it has the legal status of “property”, rather than money. In order to be a legal means of payment for the employees and, therefore, subject to taxation, the cryptocurrencies must be convertible into fiat and can be used as a means of payment for goods and services.
Bitcoin is mentioned at least 18 times in the tax authority document. He also stresses that BTC payments to employees are taxable regardless of legal status and public comments.
BTC salaries, taxes in NZD
The rate of income tax applicable to Bitcoin and cryptocurrencies in New Zealand is 33%. These taxes will be paid in the New Zealand NZD dollar. Therefore, the Department of Internal Revenue does not accept BTC directly. Taxpayers are required to turn the taxable portion of crypto into fiat, according to the market assessment at the time of the salary transaction.
This is great news for Bitcoin. New Zealand companies can thus legally offer their employees the option of receiving a certain percentage of their wages in BTC. If the employer already owns Bitcoin, this will significantly reduce the expenses with intermediaries for the payment of wages.