New Zealand Legalizes Salary Payments in Cryptocurrencies
Inland Revenue Department (IRD). New Zealand’s tax office has officially made an announcement to legalize salary payments in digital currencies. In its latest August Bulletin, the IRD has published a new ruling under its Income Tax Act which mentions that businesses can consider paying their employees salaries in cryptocurrencies.
However, they need to ensure that the salary payments in crypto are under an employee contract. Besides, the payments are for a fixed amount and come as a part of the regular employee remuneration.
The IRD in its report also mentions that the crypto assets being paid must be able to convert in fiat or should serve the primary purpose of being a currency or being pegged to one or more fiat currencies.
The IRD clarifies: “In the current environment where crypto-assets are not readily accepted as payment for goods and services, the Commissioner’s view is that crypto-assets that cannot be converted directly into fiat currency on an exchange [...] are not sufficiently ‘money like’ to be considered salary or wages.”
Besides the guidance for tax payments for receiving salaries in cryptocurrencies are fixed at a predominant rate and will cover a part of employees’ regular salary. However, it should be noted that these provisions offered are only salary and wage workers and doesn’t include self-employed tax payers.
New Zealand’s current decision comes as a welcome move for the crypto industry at a time when global regulators are struggling to have proper regulatory framework for the use of digital assets.
Besides, the country is taking several other initiatives to keep up with the FinTech industry transformation. Recently, the Auckland Savings Bank announced its investnt in a blockchain start up TradeWindow.
The investment comes as a part of the Savings Bank’s initiative to upgrade its new trade platform and introduce the Distributed Ledger Technology (DLT).
AJ Smith, the CEO of TradeWindow, said: “The decision by ASB to invest in TradeWindow is a great vote of confidence. The bank is committed to accelerating the progress of New Zealand’s trade environment using new technology and recognizes the potential our product has to streamline trading between Kiwi exporters and the rest of the world”.