Cryptocurrencies are digital currencies that are largely unregulated. They allow users to send money online without really being tracked.
This week’s ruling by the New Zealand’s Inland Revenue will take effect on 1 September 2019. The country’s tax authority, though, has stated payments must be regular fixed amounts – and linked to at least one regular currency. It, too, must be able to be converted directly into a standard form of payment.
“This is another step towards governments recognising that actually people are wanting to be paid in crypto. Some people would rather deal with their wealth in that medium,” the Financial Times quoted law firm Mackrell Turner Garrett solicitor Thomas Hulme as saying.
The ruling excludes self-employed taxpayers from earning income in cryptocurrencies. Companies that exercise the new allowance will be able to deduct dollars and cents under New Zealand’s pay as you earn income tax scheme.
New Zealand’s approach is different to Australia, where head of finance at ASX-listed blockchain company DigitalX Jonathan Carley has rallied for change.
“It makes it really unattractive because the company gets whacked by paying fringe benefits tax. The company will wear the costs of around 47 cents in the dollar,” added Carley.
“You might pay people in a stablecoin but the Australian Taxation Office’s interpretation is that it is not a currency, it’s a cryptocurrency, and it attracts FBT.”