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According to latest official tax information bulletin in New Zealand, cryptocurrency salaries are now legal inside the country starting from September 1, 2019. With that legalization, the companies can now pay their employees salary in cryptocurrency.
The past has not been very kind to cryptocurrencies and blockchain technology with the constant threat of criminals hijacking the prospect of the growing crypto industry. Numerous cases of money laundering, cyber crimes and an extremely volatile market have seemed to keep cryptocurrencies like Bitcoin(BTC)trade away from mainstream systems.
But despite all of these factors, many countries are still prepared to integrate blockchain and cryptocurrencies into their systems, of course under proper regulations and controlled environment. It is true that crypto directly affects the transactions and trading inside these systems, but something is better than nothing.
This time, the news of legalization of cryptocurrency salaries came from New Zealand where, according to the information published by New Zealand tax regulatory authorities – the Inland Revenue Department (IRD) – firms are authorized to pay their employees in cryptocurrencies. The decision is set to be implemented from September 1, 2019.
The Inland Revenue Department of New Zealand recently issued a tax information newsletter on Wednesday, August 7th. It specifically points out details regarding the new 91D decision of its 1994 Tax Administration Act, which states that an employee can choose to receive his salary in crypto assets as long as the services are under jurisdictions of an employment contract, for a fixed amount of payments and develop as a regular part of salaries for the employee.
Another thing the ruling highlighted was the feasibility of cryptocurrency used for the purpose. According to the amendment, the crypto asset being used to pay the employees must be exchangeable for fiat currencies. In simpler words, the payments must act as a currency for the receivers or “the value of the crypto-asset is pegged to one or more fiat currencies.”
In addition, the decision applies only to salary earners, including any payments made for regular services, commissions, and additional benefits. This implies that self-employed people aren’t going to be part of the new proposal. As far as tax is concerned, wages paid in crypto assets are treated as income payments known as PAYE (pay as you earn), which are deducted by the employer and transferred to the tax department.
Crypto Is Heading to the Mainstream
All of this implies that cryptocurrencies are slowly making their way inside mainstream system like they were supposed to. In addition to that, New Zealand is now one of those countries contributing in regulations and taxation of cryptocurrencies to better prevent abuse of virtual currencies once and for all. Legalization of crypto assets as salary in the country, perhaps, will bring cryptocurrencies and their owners inside the accountability system and reduce tax evasion.
From an employee’s point of view, the ruling has its pros and cons. The biggest pro might be the bypass of expensive cross-border payments to employees. But in contrast, the idea of getting paid in cryptocurrencies or any other digital asset might not be fully realistic yet.
The cryptocurrency market is still notoriously volatile. Bitcoin, for example, usually fluctuates in value of around 5% in 24 hours. Keeping that in mind, it is not feasible for every individual to receive salaries in cryptocurrencies and worry about them reducing in value.