New Zealand becomes the first nation in the world to legalize cryptocurrencies salary. New Zealand’s tax office, the Inland Revenue Department (IRD), has made it legal to receive salaries in cryptocurrency, and be taxed accordingly as per the law.
The country’s tax agency ruled salaries and wages may be paid in cryptocurrencies so long as the preferred digital coin is pegged to at least one standard, or fiat, currency. New Zealand also requires that the crypto of choice be directly convertible into a standard form of payment.
In its August bulletin, the agency published a new ruling under the Income Tax Act (in relation to section RD 3) that states that an employee can be paid salaries in crypto assets as long as the payments are for services performed under an employment contract, are for a fixed amount and form a regular part of the employee’s remuneration.
The move brings the controversial digital asset further into the realm of everyday payment methods. Cryptocurrencies are relatively free of regulation, and their untrackable nature helped them grow popular with anonymous online purchases. The move serves as “another step towards governments recognizing that actually, people are wanting to be paid in” cryptocurrencies, said Thomas Hulme, a solicitor at London-based law firm Mackrell Turner Garrett, to the FT.
Crypto enthusiasts welcomed the news on social forum Reddit. “Great, one more step towards full crypto integration around the world,” wrote one poster.
Thomas Hulme, a solicitor at London-based law firm, Mackrell Turner Garrett, said the move amounted to “another step towards governments recognising that actually people are wanting to be paid in [crypto].” He added that such demand represented a cultural change: “Some people would rather deal with their wealth in that medium.”
New Zealand’s decision comes nearly two months after Facebook announced its own cryptocurrency, named Libra. Though the reveal stoked privacy concerns from investors and government officials alike, the tech giant’s interest in digital currency added new legitimacy to the technology.
The new ruling – signed on June 27 by the agency’s director of public rulings, Susan Price – will apply for three years from Sept. 1, 2019.
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