Some countries have legalized employers to pay their employees in crypto. The latest one to the list is New Zealand. The Inland Revenue Department of New Zealand has legalized crypto salary payments in the country. The ruling will take force on September 1st this year and it will have a period of three years.
According to the guidance by the tax authorities, there can be several cases where employers can pay salaries with crypto assets. This can happen once the employee accepts his/her payments for services under a functional employment agreement. This condition applies when it’s for a fixed amount or when it is a regular part of the employee’s remuneration. Additionally, the guidelines for crypto salary payments are only applicable for salary and wage earners. This means self-employed taxpayers cannot benefit from this. Also, it will be impossible once the payment becomes a subject to a lock-up period and the crypto becomes fiat convertible.
As per the source, money like crypto-assets are those that give a general peer-to-peer payment system. It is not like how assets work similarly to vouchers, shares or debt securities. Therefore, in order to make the wage taxable, the agency wants the crypto-asset to have an important role as a currency.
Cryptocurrencies have been a hot topic for regulators in the past couple of years. Last week, the British tax agency had demanded customer and transaction information from cryptocurrency exchanges.