Explain that income

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YMCA

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Greetings

We are busy having a argument or you could call it a heated discussion .I am going to break the argument into questions to make it easier to understand and maybe get a clear answer from some of you :). I will post my views later on so we can get unbiased answers .

Let's say you create a youtube channel , website , blog (XYZ) and the XYZ starts generating income (mybroadband for example) how do you explain that to SARS ?

If you sell products/software on your website ($2000+ monthly) via Paypal/credit card or EFT how do you use that money ?

Now the big bad , if you mine bitcoins (any cryptocurrency for that matter) and sell them generating a income what do you tell SARS ?
 
YMCA said:
Greetings

We are busy having a argument or you could call it a heated discussion .I am going to break the argument into questions to make it easier to understand and maybe get a clear answer from some of you :). I will post my views later on so we can get unbiased answers .

Let's say you create a youtube channel , website , blog (XYZ) and the XYZ starts generating income (mybroadband for example) how do you explain that to SARS ?

If you sell products/software on your website ($2000+ monthly) via Paypal/credit card or EFT how do you use that money ?

Now the big bad , if you mine bitcoins (any cryptocurrency for that matter) and sell them generating a income what do you tell SARS ?
Click to expand...

Income is residency based in SA tax law these days. So if you reside in SA, any income you earn is taxable. Notwithstanding any double-tax agreements with other countries.
 
Splinter said:
Income is residency based in SA tax law these days. So if you reside in SA, any income you earn is taxable. Notwithstanding any double-tax agreements with other countries.
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This, quite simple really.
Income from BTC will fall under investment income. Sorry if you're looking for ways to palm your tax burden off onto the rest of us :crylaugh:
 
xeslaro said:
If you mine BTC, Investment income?
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No, income from a business IMO. Hopefully you are sensible and keep track of the input costs (hardware, electricity, real estate). If you look at the core of what mining is, you're offering the BTC community a service in bolstering the ledger. If you want to split hairs, I'd say you only need journal it after converting to cash or an official bank account until further notice... but that's opinion.
 
Heavyonthemagick said:
No, income from a business IMO. Hopefully you are sensible and keep track of the input costs (hardware, electricity, real estate). If you look at the core of what mining is, you're offering the BTC community a service in bolstering the ledger. If you want to split hairs, I'd say you only need journal it after converting to cash or an official bank account until further notice... but that's opinion.
Click to expand...

I foresee most miners not bothering to declare the income. Much the same as, for example, taxi owners, informal traders, small home enterprises, prostitutes, gardeners, maids.....the list is endless.
 
xeslaro said:
I foresee most miners not bothering to declare the income. Much the same as, for example, taxi owners, informal traders, small home enterprises, prostitutes, gardeners, maids.....the list is endless.
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Agree. Which is why the average Joe has to work that little bit harder so we can all have nice things.
 
xeslaro said:
I foresee most miners not bothering to declare the income. Much the same as, for example, taxi owners, informal traders, small home enterprises, prostitutes, gardeners, maids.....the list is endless.
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The traces will however still be there the moment it's converted.

Whether declared or not. It will catch up eventually if the numbers are large enough.
 
SauRoNZA said:
The traces will however still be there the moment it's converted.

Whether declared or not. It will catch up eventually if the numbers are large enough.
Click to expand...

Exactly. Nothing like a surprise audit and a hefty fine for unpaid taxes.
 
Is bitcoin seen as an actual currency? What if you keep that money in bitcoin.
 
static_sa said:
Is bitcoin seen as an actual currency? What if you keep that money in bitcoin.
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That is where it gets grey. IMO SARS won't allow reduction in tax through investment loss if that investment is BTC...
 
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Here is a way to get access to the money (not sure of the legalities involved)

Put all your foreign income into a BTC wallet and order an international debit card. You can then transfer your BTC into USD and then use the card anywhere and even draw cash.
This is evading the grey tax area surrounding BTC
 
YMCA said:
Greetings

We are busy having a argument or you could call it a heated discussion .I am going to break the argument into questions to make it easier to understand and maybe get a clear answer from some of you :). I will post my views later on so we can get unbiased answers .

Let's say you create a youtube channel , website , blog (XYZ) and the XYZ starts generating income (mybroadband for example) how do you explain that to SARS ?

If you sell products/software on your website ($2000+ monthly) via Paypal/credit card or EFT how do you use that money ?

Now the big bad , if you mine bitcoins (any cryptocurrency for that matter) and sell them generating a income what do you tell SARS ?
Click to expand...

Income tax
 
I must actually start recording my mining costs. How would you separate out mining costs from your regular electricity costs?

I suppose I'll have to create a spreadsheet in which I log how many hours I mine per month, calculate electricity consumption based on that, and then arrive at a figure. I guess that as long as SARS can see the rationale for my calculations, I should be okay?
 
I had a discussion on the mining topic with somebody earlier and he suggested the following. Declare earnings as you mine it at ZAR equivalent. Running costs can be deducted from this. By the time you cash out, there is a potential capital gains tax component to this, assuming BTC keeps on strengthening. Declare this as CGT - this way you will be taxed on a smaller portion due to the lower CGT imposed on the delta. It should look something like this:
Mine 10 coins worth ZAR 100, cost against it is ZAR 50, get taxed on ZAR 50 profit
When cashing out, 10 coins are hypothetically worth ZAR 400, CGT gets calculated on ZAR 300 @ 18% if you're an individual.

As opposed to declaring it on cash out:
ZAR 400 gets taxed at full rate, less expenses.

Hope this makes sense, "smart" isn't my first language.
 
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