Bitcoin and SARS

[SZN]

You telling me If I buy a Pack of Pokemon cards and get a super rare card.... hold onto it for a while, and then trade it to a buddy for his car... Tax must be paid for this trade?
How the hell does tax get involved if me and my mate trade "stuff"?

Pretty sure that would fall under "personal use items" and would thus be exempt for CGT purposes.

 

[Thor]

Fair, why? There is no tax on pure currency fluctuations for individuals. If, however, you buy and sell an asset in a foreign currency that's where the conversion to ZAR comes in to calculate CGT. There is a deeper principal here - when your local currency declines in value, you obviously can't claim a loss, so taxing you on a gain in value of your foreign currency is illogical.

Do not* sorry

 

[Monsta Graphics]

Pretty sure that would fall under "personal use items" and would thus be exempt for CGT purposes.

But bitcoin can be 12 words on a piece of paper.
A person can theoretically make a small piece of "art" containing those 12 words, and trade that for a car.

What's that piece of art worth? What's the car worth?
Those to me, are very tricky questions as there was no form of money involved in this transaction.

My mate could reason that his car was worthless, as could I with my little scribbled paper artwork.

 

[User4456]

Can someone who's actually tried cashing out a substantial sum say more than a million tell us how the banks/SARS got their knickers in a knot and what all of the exact tax implications were? What's the point of getting into Bitcoin if SARS will just take 40% as "income".

 

[Thor]

Can someone who's actually tried cashing out a substantial sum say more than a million tell us how the banks/SARS got their knickers in a knot and what all of the exact tax implications were? What's the point of getting into Bitcoin if SARS will just take 40% as "income".

If I change my bitcoin to zar then it becomes taxable.

Only then.

 

[etienne_marais]

There are tax implications as Income Tax is not dependent on currency but value derived from trading in BTC.

I assisted someone on MyBB with their tax return this year and they had a bitcoin account. For tax purposes, everything gets converted to a Rand value irrespective in what currency the item is held.

But at what exchange rate ?

 

[User4456]

If I change my bitcoin to zar then it becomes taxable.

Only then.

Yes but as CGT or income tax? If investing in Bitcoin means a simple CGT- this would make the whole decision to play a lot easier. But at the moment someone can go through all the risk and trouble of investing in BTC only to get hit with a 40% income tax later when they cash out... instead of just CGT

 

[CAPS LOCK]

Very interesting read from somebody seemingly pretty clued-up on this topic.

Albeit applicable only in the US, there is much food for thought, and perhaps also several similarities conained in our Tax laws. In addition, the comments section provides entertainment value.

https://www.reddit.com/r/Bitcoin/comments/1uccfz/i_am_a_tax_attorney_here_are_my_answers_to_the/

 

[ProfA]

Anybody bought and successfully used a physical bitcoin debit card to withdraw Rands in South Africa?

 

[koeksGHT]

Anyone got info from SARS on mining? On 100k earned in a month transferred to zar, would I have to declare that in the "other income" for SARS purposes?

 

[ProfA]

Anyone got info from SARS on mining? On 100k earned in a month transferred to zar, would I have to declare that in the "other income" for SARS purposes?

Didn't you simply sell lots of 2nd hand stuff and the person paid you in BTC? I think selling stuff 2nd hand makes your earnings from those sales exempt from tax I think.

 

[C4Cat]

Anyone got info from SARS on mining? On 100k earned in a month transferred to zar, would I have to declare that in the "other income" for SARS purposes?

I would say yes, view that as income tax

 

[koeksGHT]

Didn't you simply sell lots of 2nd hand stuff and the person paid you in BTC? I think selling stuff 2nd hand makes your earnings from those sales exempt from tax I think.

Huh no. I bought equiptment and started mining.

 

[trolol]

Anybody bought and successfully used a physical bitcoin debit card to withdraw Rands in South Africa?

This is what I would to know as well. Can you actually get one of these without having to provide all your ID doc's,etc?

 

[Thor]

Didn't you simply sell lots of 2nd hand stuff and the person paid you in BTC? I think selling stuff 2nd hand makes your earnings from those sales exempt from tax I think.

Careful, SARS is about intent.

If you buy with btc and sell for zar, one could say you are laundering...

 

[C4Cat]

Careful, SARS is about intent.

If you buy with btc and sell for zar, one could say you are laundering...

explain?

 

[Thor]

explain?

If you send me BTC and I buy stuff, I then sell stuff for cash and whatnot, avoiding the tax I would have paid.

That is the definition of money laundering

 

[C4Cat]

If you send me BTC and I buy stuff, I then sell stuff for cash and whatnot, avoiding the tax I would have paid.

That is the definition of money laundering

I still don't understand what you're trying to say - money laundering is transforming the profits of crime and corruption into ostensibly 'legitimate' assets. If you buy stuff with BTC and you sell it for ZAR - that's not money laundering. If you don't declare your income then that could be tax evasion.

 

[Not_original]

1. No

2. No in most cases where it's held in your personal capacity and you don't sell it. If you sell it, then yes.

3. Yes. Even though it was never converted to ZAR, you have realised a gain as soon as it was used in the transaction you mentioned. The onus however is on you to declare it. If not declared, it can be considered as tax evasion by SARS and not avoidance.

4. No. Addressed in 3 above.

SARS might never become aware of the transaction though.

Tax evasion is a criminal offence. Tax avoidance is simply structuring your tax affairs in the most tax efficient way. There is however something that SARS considers as a Tax Avoidance Scheme.

Tax is also not just applicable to cash transactions but also where any financial value is involved.

As an example, if I own a property and gift it to my son while I'm alive, I would be liable to pay donation tax on the value of the property donation except for the first R100k at 20%. I could however overcome this by selling the property to him at a market related price. I would charge interest on this amount annually and write off R100k every year as a donation to my son. Eventually his debt to me would be zero and no donations tax would have been paid. SARS might consider this a Tax Avoidance Scheme but it would be for them to prove the intent of the transaction.

A good Tax Accountant should be able to assist but they don't come cheap. Tax lawyers are even more costly.

Some rather financial savvy guy at work has come up with a plan over this donation thing. He wants to donate his house ownership in part to his son, using this 100k exemption over the course of the next 20 odd years. Dont know if it will work though.

 

[trolol]

Anyone know if there has been any further progress made with regards to crypto tax? I do a combination of mining and trading. Have no clue how to declare.