New Zealand based companies can now legally pay their employees in cryptocurrency, establishing the controversial asset class as a mainstream form of payment.
As of 1st September 2019, New Zealand’s tax authority will allow salaries and wages that are regular, fixed amounts to be paid in digital currencies such as Bitcoin, Ethereum and Ripple, according to the Financial Times.
The tax ruling details that the virtual currency of choice should be at least one regular currency that can be converted into a standard form of payment and organisations that opt to pay their employees in cryptocurrency can deduct tax under the country’s pay as you earn income
A bulletin from New Zealand’s Inland Revenue earlier this month revealed that the ruling would exclude self-employed taxpayers. While regulators around the world have experienced difficulties in standardising legal frameworks for digital currenies, Wellington’s Inland Revenue have managed to find a work-around defining crypto assets as property.
Pointing out that cryptocurrency is not legal tender, the authority state that they intend on taxing crypto-salaries because “some cryptoassets have many of the characteristics of money; for example, being . . . divisible . . . and hard to counterfeit.”
However, cryptocurrencies are notoriously volatile as assets, which has raised concerns over their suitability to be retained in investment portfolios.
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