Another Crypto Tax Thread

I

icy_uranus

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Ooookay so just a quick question if anyone could assist, I submitted my IRP6 for period 1 this season and included all my crypto tax gains which I cashed out and just added them in with my normal income (I'm a freelancer), but I'm wondering if I didn't make a mistake doing so? I was wondering if I instead should have put it under the "Unusual / Infrequent Amounts" section on the IRP6 as I certainly won't be getting this sort of lump sum again anytime soon. Also I read somewhere if you have income over R1 million in a year you have to register as a vat vendor? Is that true?
 
icy_uranus said:
Ooookay so just a quick question if anyone could assist, I submitted my IRP6 for period 1 this season and included all my crypto tax gains which I cashed out and just added them in with my normal income (I'm a freelancer), but I'm wondering if I didn't make a mistake doing so? I was wondering if I instead should have put it under the "Unusual / Infrequent Amounts" section on the IRP6 as I certainly won't be getting this sort of lump sum again anytime soon. Also I read somewhere if you have income over R1 million in a year you have to register as a vat vendor? Is that true?
Click to expand...

I'm not an accountant, but as far as I know:

- If your crypto gains are long term, i.e. capital gains, you only effectively pay something like 18% on the gains. You should not put the whole gain as taxable income.
- If your crypto is income from e.g. frequent trading, then all the profit it is added to income and full tax is paid.
- If your second period is different from your estimate by something like R1 million then you pay fines.

If the amounts are large, I suggest you let a tax professional handle your returns.
 
CGT is only applicable in the 2-3 year space the rest is income tax
 
Yeah the only mistake I see is you may have been taxed less including it as capital gains, depending on when you got it and the intention. If it was as payment however then you were correct even if it's infrequent. VAT is only applicable to companies offering services/products and not freelancers. As a freelancer you work for one employer at a time basically.
 
Thanks for the advice guys! I didn't try to downplay it as capital gains, just added it all to my income and taxed it appropriately relative to my bracket like a good tax paying citizen (ugh). Although I probably should bite the bullet and find a tax practitioner to be safe, just need to find someone a bit more versed in crypto as this goes a bit beyond TaxTim lol
 
What if the person took out a degen personal loan to purchase said bitcoins, and use profits to directly repay the loan. Can u write off the loan as expenses and then only pay tax on the remaining portion?
 
vipermagi said:
What if the person took out a degen personal loan to purchase said bitcoins, and use profits to directly repay the loan. Can u write off the loan as expenses and then only pay tax on the remaining portion?
Click to expand...
Example as follows.
Loan 100k
Purchase btc 100k
Sell btc 120k
Interest 10k

You pay tax on income less expenses linked to income (the loan is not an expense but the interest is)
So income is 120k
Expense is 100k from purchase and interest of 10k so total expense is 110k

120k less R110k is R10k

Therefore you only pay tax on the 10k
 
Well good thing the bank charge interest upfront so ive basically paid the full ammount in interest already lol
 
Or another way: The loan is neither an income nor an expense. Selling price - purchase price = R120k-R100k = R20k gross profit. Profit - interest = R20k-R10k = R10k net profit.
 
Swa said:
Or another way: The loan is neither an income nor an expense. Selling price - purchase price = R120k-R100k = R20k gross profit. Profit - interest = R20k-R10k = R10k net profit.
Click to expand...
Haha this is another way to look at it. Many ways to skin a cat
 
One other thing I forgot to inquire about is whether we get taxed on crypto to crypto sales? I always read Americans complaining about that and that's why they just hold instead of day trading, but for the life of me I can't imagine SARS has the capacity to go through every uniswap shitcoin trade for God knows how long and how many people. Kinda banking on them only caring about what you actually cash out into ZAR and taxing that. Even if they do want to be anal about it I'd like to imagine there'd be some form of meeting people halfway as long as you declare the ZAR income and pay appropriately, because the rules around crypto are still forming currently so there has to be like an amnesty period provided you didn't outright dodge the tax?
 
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