New Zealand has published a ruling from the tax authorities (pdf), which states that employees may receive their salary in cryptocurrency.
The good example of New Zealand
In many countries, governments are beginning to stir how to deal with cryptocurrency. There are countries that want to outright ban, there are countries that want to take the lead through a favorable business climate and there are countries that are in between. But in many countries it is uncertain how the government wants to deal with cryptocurrency.
In that regard, New Zealand has taken a very good step in the right direction. Not only is there clarity about the policy, this policy is also pro-crypto.
Cryptocurrencys are legal
The ruling of the tax authorities states that cryptocurrency is completely legal, meaning that employees can also receive their salary in cryptocurrency from 1 September.
This ruling from the Inland Revenue Department of New Zealand dates from Wednesday, August 7. Section 91D of the Tax Administration Act 1994 clearly defines what the new regulation entails: Employers may settle wage payments in crypto. It also states how this should be dealt with in tax terms.
Only for normal salary
The judgment provides a number of conditions to be able to meet this. For example, for crypto assets to meet the income tax requirements, the crypto payments must be part of the normal salary. This must also be a fixed amount. This means that other types of payments, such as shares or bonuses, are not covered by this scheme and may not be paid out in crypto.
Moreover, the ruling only applies to salaried employees, this means that self-employed persons do not form part of the new scheme.
Are you curious about the possibilities in the Netherlands? Then look here:
Convert to New Zealand dollar
Another important requirement is that this only applies to cryptocurrencies that can be converted directly into fiat currencies on a stock exchange:
“In the current environment where crypto assets are not immediately accepted as payments for goods and services, the auditor’s opinion is that crypto assets that cannot be converted directly into fiat currency on a stock exchange are not sufficiently” money-like ” to be considered as a salary or wage. “
No lock-up arrangement
A lock-up scheme is sometimes used in the stock world. This means that shareholders may not sell their shares of listed companies. You sometimes see such a construction at ICOs, only then does the company hold the coins in your name, even if you have paid for it. The tax ruling states that these types of constructions do not fall under the new regulation and these types of coins are excluded.
Only stablecoins?
There are two more striking provisions. Namely, that the value of a crypto currency must be linked to that of a fiat currency. This suggests that payments can only be made in stablecoins. In addition, the cryptocurrency must have the same function as a payment method.
In many countries, income tax is taxed directly on the salary. In New Zealand this system is called Pay As You Earn (PAYE) and it also applies to salary payments from cryptocurrency.
There are still enough statements in the tax authorities’ publication that you can call into question. But this is a step in the right direction: clarity and a positive sound for cryptocurrency’s by a government.
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