New Zealand Tax Law Makes Salary Payments In Bitcoin & Crypto-Assets Legal, Starting September 1st
- As crypto-assets become a common way of payment for salaries, authorities provide guidance on taxation
- However, there are still a few caveats
New Zealand has given a green light to salaries being paid in Bitcoin and crypto-assets. As per the ruling by Susan Price, Director of Public Rulings on June 27, this ruling will apply for a period of three years beginning on 1 September 2019.
As per the Tax Information Bulletin, regular remuneration by employees in crypto-assets can be subject to PAYE.
The Pay As You Earn (PAYE) system is a form of paying income tax and national insurance contributions where employer deducts the taxes from the wages or occupational pension before paying it to the employee.
This ruling came on the back of crypto-assets becoming a more common way of remuneration for employees.
However, there are a few caveats.
The value of the crypto-asset should be pegged to one or more fiat currencies or can be converted directly into a fiat currency.
Moreover, it doesn’t apply to crypto-asset received under an “employee share scheme.”
Crypto-asset payments not denominated in NZD — for instance, an employee is paid 0.001 BTC per fortnight — it’s necessary to calculate the NZD value of the crypto-assets on the date it is paid.
For conversion rates, Inland Revenue will list centralized data repository sites on its website or can be obtained from public exchanges that have comprehensive KYC/AML procedures in place.