The Inland Revenue Department (IRD) has issued a ruling on the tax treatment of salary payments made in cryptocurrencies such as Bitcoin.
(Note: an earlier version of this story headlined: “NZ first nation to legalise cryptocurrency salary payments” said the ruling would make NZ the first country to legalise salary payments in cryptocurrencies). IRD says this is not correct. A spokesman said: “Inland Revenue doesn’t have the authority to legalise how salaries are paid so that’s not what has happened here. Instead we have responded to queries from taxpayers on the tax treatment of payments in cryptocurrencies. … HMRC [UK] and the Australian Tax Office have also issued guidance on this so we couldn’t say that we’re world leading on this topic either.”
The ruling, detailed in the August edition of IRD’s Tax Information Bulletin, will apply initially for three years. It follows a number of calls for the government to do more to promote the use of blockchain technologies in New Zealand.
Under the ruling payments must be for a fixed amount and a regular part of the employee’s remuneration. The cryptocurrency must be directly convertible into a fiat currency and its value must be pegged to the value of at least one fiat currency.
In June this year the executive director of BlockchainNZ, Mark Pascall, told the government’s economic development, science and innovation select committee that blockchain could inject growth into the New Zealand economy.
Pascall said New Zealand had a golden opportunity to take a global leadership role in blockchain, and he suggested the government should assign responsibility for blockchain to a minister, and form a cross-industry working group.
In December 2018 Callaghan Innovation released a report into the potential of blockchain and distributed ledgers saying they had the potential to drive significant innovation and technology exports and help ICT to become the second biggest contributor to gross domestic product by 2025.
On August 1 Radio New Zealand published a lengthy report, Is NZ dragging the blockchain? that quoted statistics minister James Shaw suggesting the government was being slow to understand the implications of blockchain technologies.
“I wouldn't even say we're dipping our toes in the water, I'd say we're looking at the water and trying to make that decision,” he told Radio NZ.
Blockchain NZ responded to the article by saying it had been partnering with its government members to help improve the general understanding of blockchain across government, and was keen to help remove any barriers to growth for the New Zealand blockchain ecosystem.