New Zealand’s tax office, the Inland Revenue Division (IRD), has made it legitimate to get salaries in cryptocurrency and be taxed accordingly.
In its August bulletin, the office published a new ruling under the Income Tax Act (in connection to section RD 3) that says that a worker can be paid compensations in crypto assets as long as the renumeration is for services rendered under an employment contract, are for a fixed sum and shape a regular portion of the employee’s salary.
The crypto asset being paid must also be able to be traded for fiat cash, and must have the essential purpose of acting as money or be pegged to the cost of one or more fiat currencies, the IRD says.
Crypto assets are given as shares for income tax purposes and are received under a worker share scheme.
As far as tax goes, compensations paid in crypto assets will be treated as PAYE (pay as you earn) salary payments. These are deducted by the employer and passed onto the tax department.
The new ruling – signed on June 27 by the agency’s director of public rulings, Susan Cost – will apply for three years from Sept. 1, 2019.
Earlier under New Zealand law, compensations were only payable in “money,” effectively the New Zealand dollar.