Salaried employees in New Zealand will now be able to earn their monthly salaries in cryptocurrencies and this plan is going to take effect from September 1st, 2019.
This news was reported in a tax information bulletin issued by the Inland Revenue Department of New Zealand in which it stated that certain cryptocurrencies that conform to the crypto and tax payment policies have been approved by the government to be used for paying salaries. The plan will be active for the next three years.
Eligibility Criteria for Cryptocurrencies
While the bulletin did not state the name of any particular cryptocurrency, it clearly spelled out the criteria for a cryptocurrency to be eligible for salary payments. According to the statement, such a cryptocurrency must be designed to primarily function as a medium of exchange, it should be capable of being exchanged for fiat or its value should be pegged to one or more fiat currencies. The reason for such criteria is to prevent companies from paying salaries to their employees in illiquid altcoins.
According to the criteria outlined by the tax authority, Bitcoin fits the bill for being used for salary payments.
Taxes Directly From Earnings
Taxpayers in New Zealand pay their taxes following the country’s Pay-As-You-Earn, also known as PAYE system. They are directly taxed from their wages or monthly salary. This explains the reason for the criteria which demands that the cryptocurrencies in question should possess the quality of being directly exchangeable for fiat.
While countries like the United States are creating FUD among crypto holders with unexpected tax notices, others like Singapore are becoming more attractive for crypto enthusiasts because of their crypto-friendly regulatory attitude. Recently, Isreali banks were reported to be restricting crypto earners from depositing their gains from cryptocurrency trading into local bank accounts, thereby inhibiting them from filing in their taxes.