New Zealand tax authorities have given the go-ahead to companies to pay employees in cryptocurrencies, thereby establishing the currencies as legal tender in the country.

The move will be effective for three years starting from 1 September 2019, said New Zealand’s Inland Revenue Department (IRD).

However, there are a few conditions.

Firstly, the provision of getting salaries in virtual currencies can only be availed by staff working under employment agreements.

The cryptocurrency payments have to be for a fixed amount and should form a regular part of the remuneration of an employee.

Another caveat is that the crypto asset being paid should be able to be exchanged for fiat currency, function as a currency or be pegged to the value of one or more fiat currencies.

In the case of the crypto-asset being offered as a share for income tax purposes, the ruling will not apply.

Moreover, self-employed taxpayers will be exempt from the ruling.

“In the current environment where crypto-assets are not readily accepted as payment for goods and services, the Commissioner’s view is that crypto-assets that cannot be converted directly into fiat currency on an exchange (that meets the requirements set out in [57] and [59]) are not sufficiently “money-like” to be considered salary or wages,” IRD said.