New Zealand's progressive approach is a boost for cryptocurrency
Payments made in cryptocurrency are already a reality and will soon be commonplace. With the advent of emerging technologies impacting a large range of sectors and aspects of our lives, progressive approaches to payments are crucial.
Governments around the world, from New Zealand to the U.K., Australia to Portugal, and several others besides, have taken proactive steps toward introducing laws or rulings around the potential for cryptocurrency payments, rather than in fiat currency alone. Recently, New Zealand is emerging as a player in the blockchain and crypto space, with key announcements in 2019 proving it is a forward-looking jurisdiction.
On June 27, 2019, New Zealand’s Inland Revenue Department (IRD) Director of Public Rulings, Susan Price, announced a new ruling determining how taxation on cryptocurrency earnings will be calculated. This ruling provides clarification on how the legislation will give both employees and companies guidance in handling taxes on permanent employees’ salaries when and if they are paid in crypto. The ruling took effect Sept. 1, 2019 for three years.
This ruling is a very positive step for New Zealand, particularly as the government is already taking a progressive approach toward Digital Government Services. Further to this, the jurisdiction is showing its willingness to approach the wider tax and payments systems with a similar pragmatic understanding of the evolving needs of an increasingly digital and decentralized economy.
New Zealand’s ruling states that payments in cryptocurrencies must be pegged to at least one cryptocurrency, and discusses the tax implications should cryptocurrencies be used to pay salaries or wages. This is similar to guidance put forth by countries such as Australia and the U.K., though stronger in form. It is a move that will hopefully nudge the remaining Digital 9 countries to follow with a similar approach.
As the global economy responds to a multitude of shifts in work patterns and scenarios, attitudes to traditional institutions, and perception of value in various forms, it is the early movers in digital currencies that will reap the most benefits.
This ruling by the New Zealand government shows the jurisdiction’s versatility in broaching how best to address cryptocurrencies and the implementation of regulations around their use in payments. New Zealand is already showing its commitment to encouraging the development of tech companies and startups, and the country is swiftly implementing means to attract the best talent in this sphere.
As it continues to show its openness to developing systems that will allow for the use of emerging technologies, New Zealand displays its understanding that the reality of regular cryptocurrency use in our daily lives is quickly approaching.