Cryptocurrency News Today: New Zealand greenlights Bitcoin salary regulation – but it’s still a bad idea
New Zealand‘s tax authorities have deemed it legal for companies to pay its employees in Bitcoin BTC and other cryptocurrencies. Companies will also be able to deduct income taxes using current PAYE (pay as you earn) frameworks under the Income Tax Act 2007.
The country’s Inland Revenue Department (IRD) published a bulletin (dated August 7, 2019) stating that the ruling was made under the Tax Administration Act 1994. (If you’re not up to speed on your New Zealand tax acts, the 1994 act typically governs the responsibilities of different government departments in relation to taxation.)
There are a few caveats, though.
For one, companies can only pay Cryptocurrency to employees working under official employment agreements. Payments also have to be for a fixed amount – “the value of the crypto-asset is pegged to one or more fiat currencies.”
The ruling also states that Cryptocurrency-based salary payments must also be able to be “converted directly into fiat currency (on an exchange).” According to the bulletin, salaries must be paid in a crypto-asset that functions like a currency.
In other words, the primary function of the coin must be as a replacement for fia