Crypto earnings & Capital Gains Tax

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Aug 8, 2017
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#21
If you bought your bitcoin at R10,000 and cashed out at R200,0000 you'd need to pay R76,000 in tax?
If you sell before 3 years, and you are in the top income bracket, then yes.
If sell after 3 years, use the calculator, and you pay less than half that.
 

Jetty

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Mar 23, 2008
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#22
If you sell before 3 years, and you are in the top income bracket, then yes.
If sell after 3 years, use the calculator, and you pay less than half that.
But how could SARS prove you haven't held BTC longer than 3 years ? Just claim you got it in 2013 when it was worthless , they could never prove otherwise.
 

Tman*

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#23
Does anyone have a tax advisor in JHB that they can recommend ?
Would prefer someone with experience with cryptos.
This is unchartered waters, no tax advisor can tell you for certain what the implications will be, we can only speculate. What is certain tho is that LUNO is in ongoing talks with SARS to tax your crypto, so it might not be the best idea to cash out via LUNO, or any other local exchange.

Personally im following this route:

BTC / ALT in foreign exchange > Bitcoin Visa/mastercard (Coinsbank / bitpay etc) > use for big expenses such as home improvement, or monthly groceries.

You can even transfer your BTC to something like Monero and back to a new BTC wallet and then into a Visa card if you want to take an extra precautionary step.
 

backstreetboy

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#24
BTC / ALT in foreign exchange > Bitcoin Visa/mastercard (Coinsbank / bitpay etc) > use for big expenses such as home improvement, or monthly groceries.

You can even transfer your BTC to something like Monero and back to a new BTC wallet and then into a Visa card if you want to take an extra precautionary step.
Fees will eat you up.
 

Arthur

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#25
But how could SARS prove you haven't held BTC longer than 3 years ? Just claim you got it in 2013 when it was worthless , they could never prove otherwise.
You'll walk straight into it. They'll ask you for some corroboration, eg report from an exchange where you (ostensibly) held the coins these past years. When you can't produce that (since you lied and proof doesn't exist), they'll ask you to make a declaration giving the underlying reason for you getting the coins in 2013. If it was payment for goods/services or a donation, they'll check whether you declared that in your 2013/4 return. If payment you didn't declare, you'll be hit with penalties and pay even more CGT since the gain will be significantly higher. Plus you'll have to explain why your wallet was dormant for 2-3 years, and what happened in your newer and more recent wallet disclosed by Luno. And you'll have a black tick on your file, so expect frequent audits in future.

Lying is never worthwhile. Not for personal integrity. And not for money.
 
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Eskimos

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Nov 1, 2011
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#27
Depends. It'll be much like shares...3 year rule and qualitative factors will apply.

For most it'll be taxed as income though.
This is probably the best rule of thumb in most cases.

The 3-year rule is sort of soft, its more the intention rather than the period. For example, if you bought Bitcoin today (as a first time transaction into cryptos) and then it hit a 10000% increase tomorrow and you sold you could claim its capital and not income based.

Obviously, if you're consistently trading cryptos then it'll be normal income
 

elL0L

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Dec 30, 2007
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#28
Let's say I made R50 000 by buying and selling Bitcoins. This is seen as an extra income and falls into the 31% bracket. Making tax payable 50000*0.31 = R15 500.

But what if I buy R50 000 worth of Bitcoins on 28 February - then my net income for trading Bitcoins is R0 and no tax is payable?
 

Pho3nix

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Jul 31, 2009
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#29
Let's say I made R50 000 by buying and selling Bitcoins. This is seen as an extra income and falls into the 31% bracket. Making tax payable 50000*0.31 = R15 500.

But what if I buy R50 000 worth of Bitcoins on 28 February - then my net income for trading Bitcoins is R0 and no tax is payable?
When the money hits your account in March.. you pay as per your income bracket. No dodging SARS.
 

srothman

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#30
I'm still interested to understand how funds generated from mining operations would be treated. I'm guessing as income?
 

srothman

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#32
Also, in terms of how things stand today, what are the current laws governing cryptocurrency taxation, if any?

Sure, the likes of Luno might be in discussion with SARS regarding the matter, but will SARS come and hound me for the R10K I withdrew from whatever exchange two years ago?
 
Joined
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#33
I'm still interested to understand how funds generated from mining operations would be treated. I'm guessing as income?
Yes, income. But what about if you mine them, then hold for longer than 3 years?

My uneducated guess is that when you mine them, you should declare their worth as income for the time you mined them in. Whatever amount they grow by, would then be CGT.
 

Sinbad

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#34
I'm still interested to understand how funds generated from mining operations would be treated. I'm guessing as income?
Yes, income. You could offset the cost of electricity though. And maybe depreciation on the mining kit.
 

srothman

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#35
Yes, income. You could offset the cost of electricity though. And maybe depreciation on the mining kit.
Hence my earlier question on registering a company and rather declaring it as revenue less expenses, but I'm too stupid to know if that's even an option.
 

Arthur

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#36
Yes, income. But what about if you mine them, then hold for longer than 3 years?

My uneducated guess is that when you mine them, you should declare their worth as income for the time you mined them in. Whatever amount they grow by, would then be CGT.
I don't know for sure, but I suspect the mined coins have only a notional value as long as they remain in crypto form. Tax is payable only on accrued income and crypto only accrues for tax purposes when converted to fiat.
 

Damac10

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Jun 22, 2014
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#37
I don't know for sure, but I suspect the mined coins have only a notional value as long as they remain in crypto form. Tax is payable only on accrued income and crypto only accrues for tax purposes when converted to fiat.
So now I wonder if I only derive income from crypto. Crypto pays monthly salary below tax threshold. What happens then?
 

IT_Steven

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May 4, 2009
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167
#40
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.
Disagree.

"The capital or revenue nature of any profit or loss on disposal of shares held for less than three years must be determined using the general capital versus revenue tests outlined in 3. The profit or loss on disposal of a share held for less than three years is not deemed automatically to be of a revenue nature."
 
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