New Zealand Rules Receiving Income in Bitcoin Is Legal, Taxable

Must Read

Opera-Backed Fintech OPay Seals $120M Investment to Grow Across Africa

Lagos-headquartered fintech Opay has sealed $120 million in a series B financing round from a host of...

Maker Launches New Dai Today, Expects to Phase-Out Old Dai in Months

Decentralized autonomous organization (DAO) Maker will launch a new type of Dai (DAI) stablecoin today. Known as...

Visa Works on Blockchain System For Large-Scale Private Data

International payment network Visa is working on a blockchain-based system for joint policy-compliant computation of large-scale private data.
- Advertisement -

New Zealand’s tax authorities have ruled that income in cryptocurrencies is legal and provided guidance on how exactly it should be taxed.

In a tax information bulletin published on July 4, the New Zealand Inland Revenue Department summarized the provisions of the public ruling, made under s 91D of the country’s Tax Administration Act 1994.

Crypto used must be “money-like” to be taxed

Specifically, the guidance on the income tax treatment of crypto assets applies to payments in crypto that form part of the employees’ regular salary and are fixed at a predetermined amount or rate — rather than, for example, payments that form part of an employee share scheme. 

Moreover, it applies only to salary and wage earners — not to self-employed taxpayers — covering both remuneration for services and bonuses, commissions and gratuities.

For a crypto asset-denominated salary to be taxable, the ruling determines that the crypto asset paid to employees must not be subject to a lock-up period and must be directly convertible into fiat currency, clarifying that:

“In the current environment where crypto-assets are not readily accepted as payment for goods and services, the Commissioner’s view is that crypto-assets that cannot be converted directly into fiat currency on an exchange […] are not sufficiently “money-like” to be considered salary or wages.”

“Money-like” crypto assets are further defined as those that provide a general peer-to-peer payment system, rather than assets that function in a similar way to vouchers, shares, or debt securities.

Thus for the wage to be taxable, the agency deems that a significant purpose of the crypto asset in question must be that it functions as a currency, or is otherwise to be pegged to one (or more) fiat currencies.

Tightening the noose

As reported, tax authorities and lawmakers globally are increasingly turning their attention to cryptocurrencies — both clarifying which provisions they fall under and attempting to tighten their grip on evasion.

Last week, crypto industry sources claimed that the United Kingdom’s tax authority was allegedly requesting that digital currency exchanges provide it with information about customers’ names and transactions aiming to identify cases of tax evasion.

- Advertisement -
- Advertisement -

Latest News

11 Years Ago Today Satoshi Nakamoto Published the Bitcoin White Paper

Today, Oct. 31, marks eleven years since the publication of the Bitcoin white paper by the still-mysterious person or...
- Advertisement -

ArBinance is Changing the Crypto Arbitrage Game with the Click of a Button

ArBinance is a professional arbitrage trading platform that aims to revolutionize cryptocurrency trading by allowing its users to conduct crypto arbitrage through...

SmartMixer is Making Bitcoin Mixing Easier for a New Generation of Users

SmartMixer is Making Bitcoin Mixing Easier for a New Generation of Users SmartMixer.io is a new bitcoin mixing service especially geared toward...

Bitpanda goes global: Announcing the Bitpanda Global Exchange and the IEO for the ecosystem token BEST

Bitpanda goes global: Announcing the Bitpanda Global Exchange and the IEO for the ecosystem token BEST Vienna-based fintech Bitpanda...

Bitpanda digitizes physical gold and silver

Vienna, 13 May 2019 – Vienna-based fintech Bitpanda launches gold and silver trading for its 1 million users. The new...