The crypto asset being paid must also be able to be exchanged for fiat currency, and must have the primary purpose of acting like a currency or be pegged to the price of one or more fiat currencies, the IRD states.
In its August bulletin, the agency published a new ruling under the Income Tax Act (in relation to section RD 3) that states that an employee can be paid salaries in crypto assets as long as the payments are for services performed under an employment contract, are for a fixed amount and form a regular part of the employee’s remuneration.
New Zealand’s tax office, the Inland Revenue Department (IRD), has made it legal to receive salaries in cryptocurrency, and be taxed accordingly.
Crypto assets are provided as shares for income tax purposes and are received under an employee share scheme, the ruling does not apply.
As far as tax goes, salaries paid in crypto assets will be treated as PAYE (pay as you earn) income 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 Price – will apply for three years from Sept. 1, 2019.
Previously under New Zealand law, salaries were only payable in “money”, effectively the New Zealand dollar.
New Zealand’s Central Bank Is Hiring a Money Futurist
Money futurists with a flair for central banking, take note: The Reserve Bank of New Zealand is hiring.New Zealand’s monetary authority is looking for a “Head of Money and Cash”, a new position that will, according to a May 5 job posting, be “focused on the future of money.” The new role will be a digital currency specialist who can speak to trends reshaping financial infrastructure – “online payments and digital currencies” – and provide “thought leadership around the future of cash and money.”
What the job entails is up for debate, but that seems to be the point. This “Cash Czar” will oversee an entire division of wonks pondering physical cash security, infrastructure and other monied areas “from a holistic and policy perspective.”
“This is a time of change for both the Reserve Bank and the global market transforming the demand and use of physical cash”, RBNZ wrote in the job description. “New and emerging forms of digital payments are here to stay and the method in which people pay for things is changing rapidly.”
That theme of change has only accelerated through COVID-19, with more businesses becoming weary of physical banknote exchange and digital payments, already on the rise in some countries, taking on even greater importance.
With its new Head of Money, RBNZ appears to be taking steps to avoid getting left behind.
“This role will be at the forefront of these changes and will ensure that we are well positioned to ensure we continue to provide leadership, guardianship and access to cash and money for all New Zealanders.”
Applications are being accepted through May 25.