In a recent ruling, New Zealand’s tax authorities have said that it is legal for companies to pay its employees in cryptocurrencies. They have also provided guidance on the tax treatment of such remuneration.
The New Zealand Inland Revenue Department has summarized the provisions of the public ruling, made under s 91D of the country’s Tax Administration Act 1994 in a tax information bulletin dated August 07, 2019. Download New Zeland’s tax bulletin.
According to the document, the ruling applies to such circumstances where the crypto-asset payments are for services performed by the employee under an employment agreement and include bonus, commission, gratuity, overtime pay, or other pay of any kind. These payments should be in a fixed amount and form a regular part of the employee’s remuneration.
“To be considered “salary or wages” the crypto-assets need to be sufficiently similar to existing notions of salary and wages,” it said.
“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.”
The ruling was signed by New Zealand‘s director of public rulings, Susan Price on June 27, 2019. It will go into effect for a period of three years beginning on September 1, 2019.
Tax authorities around the globe are increasingly making efforts to ensure tax compliance by crypto owners.