Inland Revenue Lays Out Ruling on How to Pay Staff in Cryptocurrency
Originally aired on TVNZ's 1 News, Saturday 17th August 2019.
For the first time, Inland Revenue's released a ruling telling employers how they can legally pay their staff in cryptocurrencies like Bitcoin.
It's always been possible, but the rules around tax have always been grey.
From the 1st of September, salaries in cryptocurrencies will be subject to tax, just like any other currency.
"The regulators are starting to catch up in New Zealand," Ross Carter-Brown, chief executive of BitPrime.
His company sells bitcoins and he says the clarification has been a long time coming.
There will be strict rules, and different types of cryptocurrency will be taxed differently.
Employers will also have to pay their staff in fixed regular amounts, and the payment must be able to be converted directly into a government-issued currency, like New Zealand Dollars.
While there are questions over just how popular this payment method will be, experts say they can understand the appeal.
Alex Sims from Auckland University is an expert in cryptocurrencies.
She says traditional currencies like the New Zealand or Australian dollars can be a hassle to send to people overseas.
"But if you've got a cryptocurrency, you can pay them in seconds or minutes."
There are also warnings about cryptocurrency salaries too, due to how often some fluctuate on the markets.
"I would not advise anyone to get all their money paid in cryptocurrency," she said.
The IRD will reassess their ruling in three years' time.