Bitcoin investments can cause tax implications in South Africa

Chris

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Bitcoin investments can cause tax implications in South Africa

South Africans who are investing in cryptocurrencies like Bitcoin should be aware of the tax implications as the South African Revenue Service (SARS) has cryptocurrency trading firmly in its sights.

This is the warning from Thomas Lobban, legal manager for cross-border taxation at Tax Consulting South Africa.

SARS has recently started to audit cryptocurrency traders in South Africa and asked them for a letter from their trading platform confirming their investments.
 

Flippy

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Also don't forget the geniuses at sars decided to criminalise mistakes.

So whether you don't declare you crypto at all or attempt to declare all your income derived and make a small honest mistake , the punishment would be the same.

Probably just easier to emigrate at this point.
 

garp

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Has the concept that trading between crypto’s is a taxable event in SA as opposed to selling to FIAT been 100% confirmed by SARS because I feel that this might be one of those beancounter interpretations that’s been taken to the nth degree but which doesn’t actually happen in practice?
 

saor

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If anyone at SARS actually traded crpyto for a few months they'd see the absurdity in making the taxable event any crypto transaction. Wish they'd just do a single tax event when you cash out to fiat and it would make it a whole lot easier to work with SARS.

"Hey SARS I'd like to pay tax on my crypto what to do?"

SARS:
shutterstock_376537891-_1_.jpg
 
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Swa

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Sars doesn't know the first thing when it comes to crypto. Good luck sifting through thousands of transactions. Also for some reason don't trust what that guy says.
 

Swa

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Also don't forget the geniuses at sars decided to criminalise mistakes.

So whether you don't declare you crypto at all or attempt to declare all your income derived and make a small honest mistake , the punishment would be the same.

Probably just easier to emigrate at this point.
Yes. At this point I'm just going to keep the majority I have in crypto. Once I emigrate to somewhere like Namibia I'll declare what I have as assets already owned.
 

deweyzeph

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Has the concept that trading between crypto’s is a taxable event in SA as opposed to selling to FIAT been 100% confirmed by SARS because I feel that this might be one of those beancounter interpretations that’s been taken to the nth degree but which doesn’t actually happen in practice?

It's definitely 100% correct. The taxable event is the disposal of the crypto. Whether you swop it for another crypto, or for real currency, a disposal has taken place. Barter transactions have always been taxable, there's nothing new there.
 

deweyzeph

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If anyone at SARS actually traded crpyto for a few months they'd see the absurdity in making the taxable event any crypto transaction. Wish they'd just do a single tax event when you cash out to fiat and it would make it a whole lot easier to work with SARS.

"Hey SARS I'd like to pay tax on my crypto what to do?"

SARS:
View attachment 1064759

It's not any crypto transaction that is a taxable event. It's only when you dispose of your crypto and make a gain on that disposal that tax is owed on the transaction. When you buy crypto with real currency there is no taxable event.
 

Johand

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It's not any crypto transaction that is a taxable event. It's only when you dispose of your crypto and make a gain on that disposal that tax is owed on the transaction. When you buy crypto with real currency there is no taxable event.
When you swap one crypto for another it is also a taxable event. Somebody one explained the law to me as "money must flow" in an event where value is exchanged. Biggest example where I had to pay tax is when shares got unbundled or you receive shares in some company transaction- e.g. I had to pay a whack load of tax on the creation of Prosus even though I received no cash - I had to pay tax on the gains realized till date through my holding of Naspers. Crypto is the same.
 

HavocXphere

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The funny thing is if crypto really eats the world then chance are you won't be taxed because you'd never sell basically. i.e. Can't sell for fiat if fiat is dead.

Not particularly plausible but still funny. Checkmate SARS
 

zerocool2009

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Reading the article: their prime target going forward!

If you trade crypto in cash... then you will get away with it lol
 

deweyzeph

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The funny thing is if crypto really eats the world then chance are you won't be taxed because you'd never sell basically. i.e. Can't sell for fiat if fiat is dead.

Not particularly plausible but still funny. Checkmate SARS

If you never sell your crypto then you've basically thrown your money away. If you use your crypto to buy something, that is also a potentially taxable event. When you die there will be a deemed disposal and taxable event on your crypto anyway if it's worth more than you paid for it.

One way or another SARS will get their share even if they have to wait for you to die.
 

saor

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It's not any crypto transaction that is a taxable event. It's only when you dispose of your crypto and make a gain on that disposal that tax is owed on the transaction. When you buy crypto with real currency there is no taxable event.
Which is basically every trade. Mess around with altcoins for a month and see how much of a pain this becomes.
 

Gudnews

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I get the sense SARS still operates under the impression that only the wealthy are interacting with foreign trade platforms. The internet has opened that world up to us simpletons as well.
 

deweyzeph

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Which is basically every trade. Mess around with altcoins for a month and see how much of a pain this becomes.

Sure, but a well-planned spreadsheet should sort that out. Record every transaction meticulously and you'll have everything you need when tax season comes around.
 

Thor

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Sure, but a well-planned spreadsheet should sort that out. Record every transaction meticulously and you'll have everything you need when tax season comes around.
Airdrops
Launchpad incentives
Staking
Migrations
Cross funding

Please, what Sars wants is not compatible with WEB3.
 
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deweyzeph

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Airdrops
Launchpad incentives
Staking
Migrations
Cross funding

Please, what Sars wants is not compatible with WEB3.

Yes, I'm aware of all the different transactions, but as far as SARS is concerned that is your problem, not theirs. All of the transactions you've mentioned above have real-world analogues that SARS taxes all the time. Just because it's crypto-related makes no difference whatsoever. Whatever transaction you enter into there will be a calculable gain or loss that acrues to you that will either be of a capital nature or a revenue nature. Whether that's passive income from staking, or raw cash from selling, or bartering one crypto for another, in some way you've either won or lost. SARS doesn't care when you lose, but they definitely want a piece of the action when you've won.

Bottom line is that crypto is no different to any other asset and the same tax rules apply whether you're bartering coffee beans or Bitcoins.
 
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