In a gargantuan leap for blockchain mass adoption, the New Zealand Inland Revenue Department (IRD) recently announced the legalization of salaries, wages, and bonuses in cryptocurrency. The arrangement, prescribed for by the IRD and outlined in BR Pub 19/01 of the Income Tax Act allows the remuneration of any employee in cryptocurrency-assets where:
- Employee performs services under an employment agreement;
- Payment is for a fixed amount; and
- Constitute a regular portion of said employee’s remuneration.
It’s important to note that the above legalization and allowance will only extend to salary and wage earners, and NOT self-employed New Zealand taxpayers. All cryptocurrency-asset payments must also be able to be exchanged for fiat (USD, SGD, GBP), and fixed to the price of at least one fiat currency in the world.
“The first step is to consider whether the payment is subject to PAYE. This is because, to the extent that an employment-related benefit is taxable to an employee, it will not be a fringe benefit. Therefore, if the provision of crypto-assets to an employee falls within the PAYE rules, PAYE will apply even if the FBT rules would also otherwise apply.”
Payment and taxation in cryptocurrency-assets will be legal as of September 1st, 2019.
We’re interested to hear your thoughts on New Zealand not allowing self-employed citizens to benefit under this arrangement and taxation scheme. Which cryptocurrencies would you like to be paid in? Would you worry about crypto market volatility and fluctuations? Let us know in the comments!
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