Crypto earnings & Capital Gains Tax

MadCat

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Dec 22, 2009
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350
#2
Lets for interest sake say I have 1mil worth of Crypto and I would like to convert that into my ZAR bank account. What would the tax implications for that be? Would be nice to pay off the house.
 

crack2483

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Oct 27, 2013
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#3
I'm not clued up on tax at all. Does this only apply if you've cashed out your crypto to ZAR?
 

SaiyanZ

Executive Member
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Jun 5, 2008
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#4
Will SARS ask for proof backing the gains calculation and if so, what will we do?

What if some of the gains are from trading and not just buy/hold?

Don't we need to hold without any trading for at least 2 years in order for the profit to qualify as capital gains instead of income?
 

Syphonx

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Jun 25, 2008
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#5
Don't we need to hold without any trading for at least 2 years in order for the profit to qualify as capital gains instead of income?
Looks like it, the CGT calculator won't let me add a calculation where the asset was bought after 2015.
 

Pho3nix

The Legend
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Jul 31, 2009
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#6
We had this discussion in the arbitrage thread.
A forumite mentioned it wouldn't be capital gains tax but rather any amount going into your bank account would be looked at as income and taxed that way.

Too lazy to find the thread.. maybe in the morning
 

HavocXphere

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#7
We had this discussion in the arbitrage thread.
A forumite mentioned it wouldn't be capital gains tax but rather any amount going into your bank account would be looked at as income and taxed that way.

Too lazy to find the thread.. maybe in the morning
Depends. It'll be much like shares...3 year rule and qualitative factors will apply.

For most it'll be taxed as income though.
 

Stefanmuller

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#8
It would be interesting to see how much people made from crypto from actually cashing out and how much they put in and when. I suspect most "profits" are still in HODL, which is anyway not yet realised and taxable. I also suspect that anyone who realised a sizeable amount, would have bought quite a while ago (like put in R10k 3 years ago and sold and made R250k profit). That would fall under capital gains.

Then you get guys who speculate and bought R100k worth a year ago and made like R900 if they sold at R300k. I think those situations are few and far between as most people with that kind of money to speculate would have sold sooner. For those people a R200k profit will also not make a big difference as they probably have lots of cash anyway so wont even raise a flag.

Without bitcoin exchanges issuing statements or tax certificates SARS will have a hard time calculating capital gains and getting it into their radar. Whether they treat is as trading income or CGT there is still the problem of proving the initial investment amount. There is no purchase agreement or invoice and no statement. The full exchange history for your profile will have to be examined, or bank statements to show the initial investment.

I guess they can play hardball and just deem any cashout to be fully taxable, with no deduction, to simplify the process. But that is also not fair as R100k put in and getting R150k out does not equal R150k profit. They can only hope for taxpayers to disclose truthfully.

On another note, a place like Luno must be making millions, on which they hopefully pay Tax in SA, so there is some incentive for SARS to not worry too much as they do get something out of the whole craze. Money used to buy BTC was mostly already taxed except in cases where people are paid in BTC.
 

Zukat

Senior Member
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Oct 11, 2010
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632
#9
We had this discussion in the arbitrage thread.
A forumite mentioned it wouldn't be capital gains tax but rather any amount going into your bank account would be looked at as income and taxed that way.

Too lazy to find the thread.. maybe in the morning
Correct, if the crypto wasnt held for 3 years it will be classified as trading which will fall under income tax and not CGT, in my view they would only be looking at what went in and what came out on FIAT side of your bank account, so your movement within crypto wouldn't be considered as long as you dont cash out for 3 years.
 

Pho3nix

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#11
Correct, if the crypto wasnt held for 3 years it will be classified as trading which will fall under income tax and not CGT, in my view they would only be looking at what went in and what came out on FIAT side of your bank account, so your movement within crypto wouldn't be considered as long as you dont cash out for 3 years.
Called your tax guy? I was too lazy and worked off what the tax peeps on myBB said :eek:
 

MadCat

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Dec 22, 2009
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350
#12
This also seems to focus on somebody "Spending" and "Holding" currency. What about people who mine and hold? What tax do they fall under?
 

srothman

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#13
So let me see if I have this correctly;

If I decide to mine a million bucks worth of crypto per month, and I decide to change crypto to ZAR into my bank account, I will be taxed for.... income tax? If I'm being taxed on income, which I assume would be total income, i.e. my salary plus my R1m/month I want to cash out?

At the risk of turning this discussion below-board (it's not my intention), how would one manage this, say, if you were to register a company and declare the mining income as revenue instead?
 

srothman

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Mar 30, 2010
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#16
Send it to an off shore account and use the card or draw the cash here..?
So you would send from which exchange to which account, for example. Surely, if money leaves, for example Luno, the destination becomes irrelevant, i.e. local or foreign bank account? Or do I have it wrong?
 

Jetty

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Mar 23, 2008
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163
#17
Does anyone have a tax advisor in JHB that they can recommend ?
Would prefer someone with experience with cryptos.
 

backstreetboy

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Jun 15, 2011
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#18
So you would send from which exchange to which account, for example. Surely, if money leaves, for example Luno, the destination becomes irrelevant, i.e. local or foreign bank account? Or do I have it wrong?
From cex.io to foreign bank. Luno doesn't need to be in the equation.
 

SaiyanZ

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Jun 5, 2008
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#20
I'm going to wait until some cryptocurrency becomes more mainstream so that I can use it directly for payments. Better than getting involved with tax issues now.

Edit: Those that bought at R300k and cashed out at R200k. If SARS taxes gains then these people should also be able to reduce their taxable income with the losses. So SARS will need to pay up.
 
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