Is Bitcoin the New Paycheck?

By: Agnes Toledo, R.N., J.D.

New Zealand-The government authorized companies to pay employees in crypto.

Starting September 1, 2019, it is legal for companies in New Zealand to pay their employees’
salaries in bitcoin. Until then, salaries are only payable in fiat currency (e.g. New Zealand
dollars).

The Inland Revenue Department (IRD) published a new ruling (dated August 7, 2019) that
bitcoin can replace money in the paychecks of employees. The August bulletin states that
cryptocurrency is now recognized by law as a mode of payment for the services rendered by the
employees. There are a few conditions, though.

One, it only applies to employees with a valid employment agreement with the company. It must
be issued as a payment for the regular commission, wages or salary, or any type of compensation
for the work done.

Two, the employee must be paid a fixed amount. The company has to maintain the crypto
currency’s value at a fixed exchange rate to the New Zealand dollar. This way, the crypto’s value
will rise and fall along with the dollar.

Three, the bitcoin payments must be convertible to fiat currency. An employee who receives a
crypto salary must be able to convert it directly to the New Zealand dollar. The crypto payment
must function as a legal tender.

For it to be a valid form of payment, the crypto must be attached to regular currency. The tax
department requires that crypto should be directly convertible into cash or any other normal
mode of payment.

Unlike other crypto assets, salaries paid in cryptocurrency are tax-deductible. The employer can
deduct the income tax and forward it to the tax department.

The existing New Zealand dollar shall remain as legal tender and can be used alongside the
cryptocurrency for transactions to pay for workers’ services until such time as IRD demonetize
it.

With the revolution in the digital currency industry, giant companies like Facebook, JP Morgan
Chase and Wal-Mart consider creating a digital currency for its customers and others. These
enterprises were of non-crypto origin, but intend to have their own crypto product to take benefit
from its unprecedented ease of transactions.

Crypto is known for transparency and is the easiest payment mode to ensure that you are
completely anonymous when making a financial transaction online. However, several companies
have maintained a neutral position about using blockchain in their business transactions. Some
claim that cryptocurrency still, has a long way to go in terms of fraud protection and stability.
But, with the top players in the business world using cryptocurrency, others may change their
minds and adopt this technology as well.

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