Today, there are many legitimate ways for businesses and individuals to get paid in cryptocurrency.
From online payment systems designed to make it easier to buy and sell using BTC, to companies and job-seeker platforms providing payment in cryptocurrency, there are plenty of ways you can receive payment in the form of digital currency.
But there are some important tax, legal and volatility considerations to be aware of before making the switch, especially for Australian residents.
Some companies offer payment to employees in cryptocurrencies like Bitcoin, though it's uncommon in Australia. There are even several job-seeking websites designed to allow freelancers to find work and get paid in cryptocurrency.
If you currently have a job, you could also ask your employer whether it’s possible to get a portion of your salary paid in Bitcoin. However, with many employers wary of paying in cryptocurrency, you may have to explore other options. One example is Bitwage, which specialises in converting fiat currency salaries into cryptocurrency, but is currently only available on payments from UK, US and European employers.
At the time of writing, the Australian Taxation Office (ATO) says that if an employee has a valid salary sacrifice arrangement with their employer to receive bitcoin as remuneration instead of Australian dollars, BTC payments are treated as a fringe benefit and the employer is subject to the provisions of the Fringe Benefits Tax Assessment Act.
If there’s no salary sacrifice agreement in place, the remuneration is treated as normal salary or wages and the employer will need to satisfy their pay as you go taxation obligations as they usually would when paying with fiat currency.
When the Pyeongchang Winter Olympics kicked off in February 2018, Canadian speed skater Ted-Jan Bloemen made headlines for becoming the first athlete to be paid in cryptocurrency. The arrangement was part of a sponsorship deal with ONG Social, a social network and crypto community, and virtual reality provider CEEK VR.
Meanwhile, more than 4,000 employees at Japanese Internet firm GMO Group have the option to receive a portion of their salary in bitcoin, while plenty of other companies in the crypto sphere have been offering bitcoin salary payments for years.
One of the key ways investors can earn money from shares is to buy stock in a company that pays dividends to shareholders. This practice is mirrored in the crypto world, as some cryptocurrencies also pay dividends to coin or token owners.
The two most common ways to access dividends are by:
For example, NEO holders are rewarded with GAS, the fuel used to power the NEO blockchain network. With every new block generated, eight GAS are distributed for all 100,000,000 NEO.
Another example is Komodo (KMD), which pays an annual reward rate of 0.01% to KMD holders, while Nav Coin (NAV) pays up to 5% yield to users who stake their NAV holdings.
In this way, some cryptocurrencies provide added value to buyers, providing the opportunity to earn a passive income from your crypto holdings.
Take a look at the table below for a round-up of some of the most well-known dividend-paying coins.
| Coin | Dividend | |
|---|---|---|
| NEO (NEO) | GAS token paid out with each new NEO block, proportional to the amount of NEO held. | Learn more |
| Komodo (KMD) | 0.01% yield earned on KMD holdings, paid annually. | |
| KuCoin Shares (KCS) | Fees collected on the KuCoin exchange are paid out to holders daily, proportional to the amount of KCS held. | Learn more |
| BridgeCoin (BCO) | 50% of profits from the Crypto Bridge decentralised exchange are paid out to holders who stake their coins, depending on the amount of BCO held. | |
| Neblio (NEBL) | 10% yield earned on NEBL holdings for those who stake their coins. | Learn more |
| PIVX (PIVX) | ~4.8% yield earned on PIVX holdings for those who stake their coins. | |
| Nav Coin (NAV) | Up to 5% earnt on NAV holdings for those who stake their coins. |
Mining is the process by which cryptocurrency transactions are validated, and miners are rewarded with cryptocurrency for their efforts. Mining is done using special mining programs and uses the processing power of the miner’s computer. It’s a slightly confusing concept to wrap your head around at first, so check out our guide to bitcoin mining for an in-depth explanation.
These days it’s quite difficult to make money mining bitcoin, as the process now requires specialised equipment, significant processing power and a whole lot of electricity. However, there are plenty of other cryptocurrencies that can be mined, including Zcash (ZEC) and Monero (XMR). While mining isn’t an easy way to earn a second income, it can be a useful hobby to help you earn additional funds.
Learn more about how mining works in our handy guide.
However, it’s also important to be aware of the tax treatment of mining bitcoin in Australia. If you operate a bitcoin mining business, any income derived from the transfer of the mined bitcoin to a third party must be included in your assessable income. The expenses you incur as part of the mining activity can be claimed as deductions, while any losses may also be subject to the non-commercial loss provisions.
If you’re running a business that mines and sells Bitcoin, the Australian Tax Office (ATO) treats the Bitcoin you hold as trading stock (like inventory).
There are other ways you can potentially earn small amounts of cryptocurrency, including:
Read more on this in our guide to some of the ways to earn crypto for free.
If you think getting paid in cryptocurrency sounds like a pretty sweet deal, make sure you’re aware of all the risks and potential downsides:
Visit the ATO’s guide to cryptocurrencies for more information or contact them directly on 13 28 61.
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Before getting paid in cryptocurrency, it’s essential to be aware of the tax treatment of cryptocurrency by the ATO. Key points include:
Read the full guide to cryptocurrency tax treatment in Australia.
Images: Shutterstock
Disclosure: At the time of writing, the author holds IOTA and XLM.
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