Bitcoin Is Now a Legal Form of Payment in New Zealand
In the August 2019 issue of New Zealand’s Tax Information Bulletin (published by the Inland Revenue Department), a new public ruling integrates “crypto-assets” as legal and taxable forms of payment. Correspondingly, New Zealand becomes one of the first nation states to create a proper framework for employees to receive cryptocurrency as part of their wages. However, it should be noted that the new provisions don’t concern self-employed taxpayers, and a couple of conditions are implied: no lock-up period on the coins and an easy convertibility to a fiat currency.
According to comments by the New Zealand Commissioner of Inland Revenue, bitcoin has all of the required qualities to be considered a form of payment, but it still has the legal status of “property” rather than money. Correspondingly, criteria which make it a legal means of payment and, therefore, subject to taxation include convertibility into fiat and ability to be transferred as a means of payment.
Bitcoin is mentioned no fewer than 18 times within the document. And in the sections where practical examples for fair tax calculations are required, it’s BTC that receives the spotlight. Not only does this highlight bitcoin’s supremacy as the best and most popular of cryptocurrencies, but it also emphasizes the fact that BTC payments to employees are taxable events regardless of “non-money” legal status and community narrative.
Furthermore, it’s worth pointing out that the tax rate in New Zealand is 33 percent and citizens must make the payments in NZD. In this regard, the Inland Revenue Department doesn’t accept BTC itself; rather, it expects taxpayers to convert their crypto into fiat, according to the market valuation around the time when the wage transaction happened.
This is really good news for Bitcoin, as companies in New Zealand are finally able to offer their employees the option to receive a certain percentage of their salaries in BTC. Now the process of #stackingsats on payday has become more seamless. It also opens the door for third-party fees to be eliminated if the company itself already owns the bitcoin — which translates into more satoshis for the employees and extra reasons to HODL until hyperbitcoinization.