Receiving wages in cryptocurrencies legalized in New Zealand

The New Zealand Tax Office, Department of Internal Revenue (IRD), has approved the receipt of wages in cryptocurrencies. The Agency has also published clarifications on how these payments are taxed.

In its August newsletter, the IRD published a new ruling in accordance with the Income Tax Law, which provides that an employee may be paid wages in crypto assets, as long as the payments are for services provided under an employment contract. The rule provides that the amounts in cryptocurrencies must be a fixed amount and be part of the normal remuneration of the employee.

Stable conversion or cryptocurrency

Regarding the type of cryptocurrencies that can be used to pay salaries, the new rule states that they must be convertible into fiat currencies, have the function of exchange currency or be a stable cryptocurrency.

The regulation does not include crypto assets distributed in the form of shares, which could generate dividends. They belong to a separate category that does not fall under the authority of the tax authority.

tax

As for tax, the receipt of salaries in cryptocurrencies will be treated as PAYE payments (tax as long as they are paid). The taxes are deducted by the employer and transferred to the tax department, as well as those applied to ordinary salaries.

The new decision – signed on June 27 by the agency’s director of public decisions, Susan Price – will apply for three years from September 1, 2019.

Previously, New Zealand law provided that wages were paid only in “money”, effectively in the New Zealand dollar.