In June the Inland Revenue had finished mulling over what to do about employees being paid in crypto currencies such as bitcoin, ethereum, litecoin and what have you.
Long story short, if your salary, wage, or bonus is paid partly or fully in a crypto currency, pay as you earn and/or fringe benefit tax needs to be docked, ditto student loan and KiwiSaver deductions and sent to IRD, the Commissioner said in a binding ruling.
Not in bitcoin or another crypto currency however: while IRD accepts that people can be paid for their employment in crypto money, they want their share of your earnings in good old New Zealand dollars.
When it's payday for Ken, Deirdre and Anaru at IRD's fictional Cryptowonderland Ltd, the crypto-currency bit of their remuneration needs to be converted into Kiwi pesos and any income tax liability calculated on that fiat money amount.
Is that all there is to it? Well no. Things get complicated next.
As anyone who's cast a sideways glance at crypto currencies knows their exchange rates against real world money see-saws in a madly unpredictable and rapid fashion.
Let's say Ken is paid NZ$10,000 a month, half of which is in bitcoin. PAYE is docked from both the NZ$ and bitcoin earnings but Ken doesn't exchange the virtual currency into real-world money as soon as he's paid the salary.
This would be perfectly normal, to leave the Bitcoin in the wallet to save it or to spend at a later stage instead of finding an IRD approved crypto currency exchange to swap it for real money immediately.
While it sits there, the bitcoin spikes in value. All of a sudden, Ken's bitcoin that was worth NZ$5000 on payday hits NZ$9000 (yes, this is how volatile bitcoin is). What happens to the $4000 gains? The bitcoin could also drop in value so could Ken claim losses if that happens?
Juha Saarinen: Yes, 2degrees really does slow down in the sticks
Juha Saarinen: How internet providers survived intercept law
The IRD said the gains would be taxable if the employee acquired the crypto-currency with the purpose of disposing of it. What's "acquired" in this context?
"Ken will have "acquired" the (net amount of) bitcoin at that time. Whether Ken is subsequently taxable on any gains (or able to deduct any losses) will depend on Ken's particular circumstances.
IRD is currently working on further guidance on these issues "which will be published in due course", an IRD spokesperson told me.
It looks like getting paid in crypto currencies is silly, as you will always lose more in tax compared to, for example, a bitcoin trader subject to capital gains tax only.
The IRD says freely exchangeable virtual currencies (the ruling doesn't apply to utility, access and security tokens that can't be traded beyond their issuers) is "sufficiently money-like" to be acceptable as salary and wage payments and taxable.
Confusingly, at the same they're not proper money in IRD's eyes.
Virtual currencies are not generally accepted as payment so you can't empty your digital wallet of bitcoin and the satoshis it is subdivided into at the local Countdown.
Also, you don't earn any interest on them, and the only time they produce any benefits is when they're sold or exchanged.
"This strongly suggests that crypto currencies are generally acquired with the purpose to sell or exchange them," is what IRD thinks.
Crypto currencies are similar to gold bullion and property for taxation purposes, and whether or not you'll lose a slice of any gains made on them depends on if you're seemed to be a speculator or not.
That digital files are property seems to follow New Zealand case law minted during the Dotcom and other trials.
This is problematic in a real-world context because here's what a bitcoin looks like:
That's right, nothing. Bitcoins don't have a physical form.
They are parts of transaction records, verified (very slowly) by a simple majority consensus of participants on the blockchain database network, where information can be added but not deleted or amended.
The lack of tangible qualities has bothered bitcoin boosters who have tried various ways to make the currency less virtual and more real. There are paper printouts with a wallet address for receiving money, and private keys for spending and coins with private keys behind a tamper-proof seal so that it feels like you're holding real money in your hand.
Likewise, bitcoin "wallets" don't contain any bitcoin, but private cryptographic keys to allow spending and sending of funds.
The private keys are used to sign transactions, in combination with public keys that everyone on the blockchain can see.
If somebody snags your private key(s) or you lose them, and this has happened heaps of times, that's all your bitcoin gone.
Anyone would agree with IRD that crypto currencies aren't money as such. Deeming that they're property seems a stretch however, just like with any other ethereal digital file that can be easily copied, deleted or sent wherever across a network.
When there's such uncertainty around the tax treatment of virtual currencies, let alone what they actually are, would you really want to receive your salary that way?