That said, there are not many financial benefits to an employer
for paying employees in bitcoin, but there may be recruitment
benefits. Employees can be attracted by the possibility to
receiving wages in Bitcoins. Bitcoins offer users anonymity,
low transaction fees, and greater freedom from freezes or
interruptions that banks and governments could place on ordinary
currencies However, there are pitfalls.
Firstly, employers need to ensure that employees are paid wages
that will be recognized by Employment Standards Legislation.
In Ontario, 'wages' are defined under the Employment
Standards Act, 2000 as 'a monetary remuneration for work
performed,' and the Currency Act states the monetary
unit of Canada is the dollar. The Canada Labour
Code's definition of wages is more expansive and includes
'every form of remuneration.' Finally, the minimum
wage rate for Ontario and most other provinces is expressed in
terms of dollars an hour. While the issue has never been
before the courts, employers may risk being found in violation of
minimum wage legislation if employees are paid the majority of
their wage in Bitcoin.
Second, employees may face serious tax consequences for paying
employees in Bitcoin. The C.R.A. considers payment of wages in bitcoins to
be a payment in goods — "a barter
transaction." When a person provides bartered goods or
services which would normally be sold by him in the course of his
business or profession, the value of those services must be
included in income. At the same time, if a bitcoin increases
in value after the company paid it to an employee, the increase may
be taxable as a capital gain.
Thirdly, Bitcoin value has been notoriously volatile. In
2013, Bitcoin prices fluctuated between $100 to $1,240 and has
since moved between $230 and $630 often changing 15% more in value
within a month. Employees paid in Bitcoins may end up being
displeased with their eventual compensation.
In the end, it's not entirely clear that the benefits of
paying employees in bitcoin outweigh the risks. It may be best for
employers to treat bitcoins like bonuses or stock options until the
legal and economic uncertainty surrounding bitcoins
wanes—just a "bit".
Written with the assistance of Danny Urquhart, articling
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