New Zealand issued a tax bulletin this month officially recognizing that it is legal for employers to pay employees with crypto-currencies like Bitcoin.
The crypto-currencies just have to be able to be converted into fiat currency… which is typically the case with every major crypto.
This is another step towards working crypto-currencies into the system, instead of killing their adoption due to ambiguity about legal issues.
This is a public ruling made under s 91D of the Tax Administration Act 1994.
Taxation law – All legislative references are to the Income Tax Act 2007 unless otherwise stated.
This Ruling applies in respect of s RD 3.
The Arrangement to which this Ruling applies – The Arrangement is the payment of remuneration to an employee in crypto-assets in circumstances where the crypto-asset
• are for services performed by the employee under an employment agreement;
• are for a fixed amount; and
• form a regular part of the employee’s remuneration.
This Ruling applies only to salary and wage earners, not self-employed taxpayers; and where the crypto-assets being paid:
• are not subject to a “lock-up” period;
• can be converted directly into a fiat currency (on an exchange); and either:
– a significant purpose of the crypto-asset is to function like a currency; or
– the value of the crypto-asset is pegged to one or more fiat currencies.
This Ruling does not apply where the crypto-asset provided is a “share” for income tax purposes and is received under an
“employee share scheme” as defined in s CE 7.
How the taxation law applies to the Arrangement
The taxation law applies to the Arrangement as follows: – The crypto-asset payments are “PAYE income payments” under s RD 3 and are subject to the PAYE rules.
The period or tax year for which this Ruling applies – This Ruling will apply for a period of three years beginning on 1 September 2019.
A rabid advocate of free markets, I have bought, sold & developed digital and properties since 1995, helping investors, entrepreneurs, institutions, and funds avoid maximize profits in M&A, while avoiding capital losses resulting from digital investments based on faulty or misleading data.
Having built ProfitMart, the most prolific and successful joint venture and affiliate marketing site of its time, Ron brings significant experience to digital business sustainability, growth, and verticality through untapped revenue channels.
Dad, entrepreneur, mastermind founder, growth consultant, quoted in many business texts including Business SOS, The Wealth Generators, Entrepreneur Magazine, interviewed by Aweber, Entrepreneur, Huffington Post, Success Magazine and Impact 100 Award recipient.
A decorated military veteran of 22 years, Ron received awards for innovation from the Canadian Federal Government and Chief of Defence.
Father of 3, abysmal golfer, a decent guitarist, an avid motorcyclist, and Taekwon-Do Heavyweight National Silver Medalist.