Cryptocurrency salary payments on a mass level is a huge leap forward for the mass cryptocurrency adoption, and New Zealand has just opened a new door here.
Inland Revenue Department (IRD) of New Zealand has legalized the payments from companies to employees in cryptocurrencies, including Bitcoin.
On June 27, 2019, the Director of Public Ruling, Susan Price signed the ruling. This ruling is applicable for three consecutive years commencing on September 01, 2019.
On August 07, 2019, IRD published a tax bulletin guiding individuals about income declaration in cryptocurrencies. As per the bulletin, if payments are in fixed amounts and are at regular intervals only then, an employee can receive his salary in cryptocurrencies.
Cryptocurrency Salary: the details
Per the ruling, the companies are allowed to release payments in cryptocurrencies only to the officially employed contractors. For equities and share, they can’t be paid via cryptocurrencies since they don’t fall under the said ruling. Self-employed workers are also excluded from the ruling since it applies to the wage earners and salaried individuals alone.
In correspondence with the PAYE framework – Pay As You Earn, companies would be able to deduct income taxes from the cryptocurrency-based salaries. According to the ruling, salaries paid in cryptocurrencies must be convertible directly to fiat currency through any exchange that the employee chooses like Coinbase or Binance. Also, it shouldn’t have a period of lock-up. It was also recommended by the agency to use stablecoins for salary payments because usually their value is pegged to some fiat currencies.
The focus of this move is apparently on the companies already offering cryptocurrency salary to their employees. The government has taken this initiative in compliance with the rising demand of the public to be paid in Bitcoin and other cryptocurrencies.
While on the other hand, the Internal Revenue Service (IRS) has been sending tax warning letters to cryptocurrency traders to curb tax evasion in the United States.