Finally, New Zealand government has legalized the acceptance of bitcoin and, also, provided a guideline for its taxation.
So, the New Zealand Inland Revenue made this decision known through its monthly bulletin of July by giving a summary of the part of the constitution backing these decision (S. 91D of the Tax Administration Act of 1994).
Taxable bitcoin must be in the form of money in New Zealand
To be specific, the section of the Act made it clear that such Crypto must be in the form of a salary paid to an employee. The rate should be determined before its implementation but should not be a payment that is included in an employee share scheme.
Perhaps, the Act has simplified it – only salary or wage earners are liable to the condition. It does not apply to business owners.
To tax the cryptocurrency, it must not be in a fixed-deposit form, and it should easily be converted to the local fiat currency.
“In a world where lots of controversies surrounds crypto, the commissioner’s opinion is that any crypto that cannot be exchanged to the local fiat currency should not be regarded as money-like.”
It further defines “money-like” asset as one, which can be used to make general peer-to-peer trade instead of assets which operates like shares, vouchers, or debt securities.
Tightening the Noose
Reports have shown that lawmakers and tax authorities have beamed their searchlights towards the cryptocurrency sector – by pointing to rules that cover its operations and, also, trying to clampdown tax evasion.
Before it was reported that the UK allegedly approached digital currency operators to provide them with names of its customers in a move to track tax evasion.