A recently published ruling (pdf) from the New Zealand tax authorities has opened the doors for employers in New Zealand to pay their staff in cryptocurrencies. In the light of places like India whose central bank has fought tooth and nail to ban cryptocurrency and won the move from New Zealand is quite progressive.
Holding, selling or dealing in cryptocurrencies such as Bitcoin could soon land you in jail for 10 years in India. The “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” draft has proposed 10-year prison sentence for persons who “mine, generate, hold, sell, transfer, dispose of, issue or deal in cryptocurrencies. Besides making it completely illegal, the bill makes the holding of cryptos a non-bailable offence.
Bitcoin is also essentially banned in China. All banks and other financial institutions like payment processors are prohibited from transacting or dealing in Bitcoin. Cryptocurrency exchanges are banned. The government has cracked down on miners.
El Banco Central de Bolivia has banned the use of Bitcoin and other cryptocurrencies. Columbia does not allow Bitcoin use or investment. Bitcoin and other cryptocurrencies were banned in Ecuador by a majority vote in the national assembly.
From the report:
“If the appropriate valuation cannot be obtained from a New Zealand-based exchange, an overseas-based exchange can be used. For some “altcoins” (crypto-assets other than bitcoin) it may be necessary to convert into US dollars or another fiat currency, and then convert into NZD.”
Example 1: Calculating PAYE where gross-up is not required. Anaru is employed by Cryptowonderland Ltd. In addition to his $150,000 salary, Anaru’s contract provides for an NZ$10,000 (gross) bonus payable in bitcoin if Cryptowonderland’s profit exceeds the previous year’s. Cryptowonderland has an exceptional year and Anaru receives his bonus. The bonus is subject to PAYE. NZ$3,330 ($10,000 × 0.33) must be paid to the Commissioner (in New Zealand dollars). The net amount of $6,670 worth of bitcoin can be transferred to Anaru’s bitcoin wallet.
Example 2: Calculating PAYE where conversion is required. Deidre is employed by Cryptowonderland Ltd. In addition to her $180,000 salary, Deidre’s contract provides for a gross payment of 10 Litecoin if Cryptowonderland’s profit exceeds the previous year’s. Cryptowonderland has an exceptional year and Deidre is entitled to her bonus. Cryptowonderland must calculate the NZ$ equivalent of the Litecoin on the day that Deidre is paid. In accordance with its standard practice, Cryptowonderland uses conversion rates obtained at approximately 5pm from a New Zealand-based exchange that meets it KYC/AML requirements. At the relevant time, 10 Litecoin is worth NZ$1,140. The bonus is subject to PAYE. NZ$376.20 ($1,140 × 0.33) must be paid to the Commissioner (in New Zealand dollars). The net amount of $763.80 worth of Litecoin can be transferred to Deidre.
Example 3: Calculating PAYE where gross-up is required. Sarah is employed by Cryptowonderland Ltd. She receives an annual salary of $130,000 direct credited to her bank account. In addition, Sarah’s contract provides for annual bonus payments if Sarah’s performance targets are met. Sarah met all of her performance targets this year and was paid a bonus of NZ$5,000 (net) worth of ether. 48. The payment is subject to PAYE. When calculating the PAYE payable, the $5,000 needs to be grossed up ($5,000 ÷ 0.67 = $7,462.69). PAYE is then calculated on the gross amount ($7,462.69 × 0.33 = $2,462.69) and paid to the Commissioner (in New Zealand dollars).
Sounds like a great way to ensure taxes are paid.
- Wanxiang Blockchain and PlatON Launch Consortium Blockchain Infrastructure in China - October 7, 2019
- PayPal Quits Facebook Cryptocurrency Project Libra - October 7, 2019
- Walmart To Use Blockchain For Shrimp - October 7, 2019
- Channel Tools adds Blockchain-Driven Verification Service Evident Proof To It’s Kit - October 7, 2019
- Zuckerberg Under Intense Pressure to Testify to US Congress about Libra - October 4, 2019
- Report: Canadian Blockchain Industry Has Some of The Highest Paid Workers in the Country - October 4, 2019
- Bavarian Company RISE Wealth Technologies with Houston-based Entoro, Launching Largest European STO to Date at USD$120 million - October 4, 2019
- October Launch Confirmation for Telegram Open Network (TON) - October 4, 2019
- Liechtenstein Parliament Passes Blockchain Act - October 4, 2019
- Pioneer of Blockchain Certification For The Visual Arts Verisart, Raises $2.5 million in Series Seed Funding - October 4, 2019
- Uruguayan Digital Party to Embrace Æternity Blockchain Technology For Member Voting - October 3, 2019
- Decentralized Trading Technology Startup Vega Raises $5 Million Seed – Pantera Capital Leads Oversubscribed Round - October 3, 2019
- Malta-Based OKEx Kicks Off Global Compliance Standards Initiative for Cryptocurrency Exchanges - October 3, 2019
- Dama Financial and Helix TCS Establish First Blockchain-Fueled, Complaint Cannabis Marketplace - October 3, 2019
- New Digital Rights Law Enacted in Russia – Establishes Basic Definition Of Tokens And Governs Smart Contracts - October 2, 2019
- Six major Japanese Brokerage Firms Establish Japan Security Token Offering Association - October 2, 2019
- Vancouver’s BIGG Digital Assets Cuts Deal with US Federal Government Agency - October 2, 2019
- æternity Teams Up with Uruguay Can to Track Cannabis Production on the Blockchain - October 2, 2019
- Streamr Launches Global Pub/Sub Network For Machine Data - October 2, 2019
- SEC Orders Blockone to Pay $24 Million Fine for Unregistered ICO - October 2, 2019
Also published on Medium.