The tax department of New Zealand has recently listed cryptocurrency as one of the legally authorized means to receive salary, and has issued detailed instructions regarding its taxing process.
Publicly stated via a tax information bulletin on July 4, the New Zealand Inland Revenue Department has disclosed the provision summary of the new tax ruling, under the 91D of the country’s Tax Administration Act 1994.
Specifically, crypto-based income will be following the rules the income tax treatment, which is required to make up a portion of the employees’ regular salary, and is set at a pre-established amount or rate, rather than a part of their share scheme.
Additionally, the guidance only works for salary and wage earners, not to self-employed taxpayers, including for services and bonuses, commissions and gratuities.
In order to properly tax a crypto-based salary, the ruling declared that the digital asset used to pay for salary can not have a lock-up time, and can be directly converted to fiat money.
Crypto assets that act like money are the ones that facilitate P2P payments, compared to digital assets working as vouchers, shares, or debt securities. Therefore, in order to tax the crypto salary, it must be functional as a fiat currency, or at least backed by one.