New Zealand’s Revenue Agency Legalizes Crypto Salaries
The Inland Revenue Department (IRD), New Zealand’s tax authority, has published a new ruling under the Income Tax Act that makes it legal to receive salaries in cryptocurrency and be taxed accordingly. The IRD stated that employees can be compensated in crypto assets given the payments form a regular part of the employees’ salaries, are directly related to services rendered under the employees’ contract, and are for a fixed amount.
Additionally, the crypto asset used to pay employees must have the ability to be directly converted into fiat currency (using an exchange), remain liquid (the crypto assets are not subject to a “lock-up” period), and must be pegged to the price of one or more fiat currencies or must have the core purpose of acting like a currency.
Salaries will be treated as PAYE (pay as you earn) income when salaries are offered in crypto assets. These payments are then deducted by the employer and sent to the IRD. This new ruling under New Zealand’s Income Tax Act was published in the IRD’s August bulletin and will be made official beginning September 1st, 2019.