Bitcoin scores a new point on its game as New Zealand just declared its legal to pay salaries in Bitcoin or any other cryptocurrency.
However, any legal activity involving payments in crypto will be treated as such if it has similar characteristics to that of traditional money (some payments are allowed in crypto because it is considered to be "money-like")
They Can Pay You in Bitcoin, But It Is Not "Money Money"
The way it will be taxable is described on a long document containing the guidelines to have a proper understanding of Bitcoin’s nature.
New Zealand sees Bitcoin as a property. In case of salaries paid in Bitcoin, the tax authorities explained how they will calculate taxes with the following example:
Example: Employee paid part of salary in bitcoin
63. Ken is employed by Cryptowonderland Ltd. His salary is NZ$10,000 per month before tax. Half Ken’s salary is payable in NZD direct credited to his bank account. The other half is payable in bitcoin transferred to Ken’s bitcoin wallet.
64. PAYE should be calculated on the $10,000 gross payment and withheld and paid to the Commissioner (in New Zealand dollars). The net amount is payable to Ken.
65. If Ken is a Kiwisaver member or is subject to, for example, child support or student loan deductions, the Employer’s Guide (IR335) and the PAYE calculator (both available on the Inland Revenue website www.ird.govt.nz) can be used to assist with calculating these.
New Zealand doesn’t consider Bitcoin to be real money because it is not issued by any government. “They are not legal tender anywhere,” However, the report says people can be paid in Bitcoin because it "behaves like" real money —they say it is "money-like".
A Small Step for New Zealand, A Big Step For The Crypto Ecosystem
With this, the government of New Zealand wants to create a barrier that will let it formulate its own monetary policies. If Bitcoin is widely adopted as real money, the country would not be able to print additional bills, create debt and/or manipulate the total currency supply to stabilize the financial behavior of its markets.
However, this is an essential step for the whole crypto ecosystem because it opens the gates for massive adoption of Bitcoin. Also, if other countries follow New Zealand’s footsteps, we may soon be closer to be a crypto-friendly society.
Right now Bitcoin has different legal statuses depending on the country. One example of a country where salaries can be paid in crypto is Costa Rica. In that country, workers can be paid in Bitcoin under the condition of receiving at least the minimum wage in fiat. In that country, Bitcoin and cryptocurrencies, in general, are considered “quasi-money.”