SARS Profit Tax

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FrEaKo

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Hi guys,

I'm wondering how you guys are handling your profits w.r.t tax? AFAIK, any profits from crypto currency trading needs to be declared as income (not CGT) on top of whatever you are earning at the moment.

Anyways around it for now?
 
FrEaKo said:
Hi guys,

I'm wondering how you guys are handling your profits w.r.t tax? AFAIK, any profits from crypto currency trading needs to be declared as income (not CGT) on top of whatever you are earning at the moment.

Anyways around it for now?
Click to expand...

I think this a grey area atm where it specifically regards SARS' understanding - they have heard of talk of this "Bitcoin", but believe it may be some sort of exotic fruit. The term "Cryptocurrencies" has been heard by even fewer staff, who believe it may refer to the current strain of cryptolocker virus like the one that cousin Steve had.

From what I understand, what the South African law states, and what is currently enforced by those who proclaim to enforce the law in South Africa, are two separate things.

I am sure that with time someone in our government will level themselves up and clarify the position on crypto profits in regards to income tax. In the mean time, I highly doubt that anyone is being given a trip to jail for not declaring crypto profits. How do they define it? Is the growth from pure BitCoin staking defined as profit? If you buy Bitcoin, trade it for NEO, make 20% profit when you trade it back to BTC, but in the mean time BTC has also gone up by 50%, is your profits taxable measured on 20%? 50%? or 70%? Is profits taxable purely defined by how much ZAR you originally invested, vs how much you eventually convert back into ZAR? Can you lower the profits tax bracket by spreading the ZAR conversion/withdrawals over many tax seasons?

I think there's just too many variables and complications at the moment for it to be within the competency of our tax collectors just as yet. If crypto currencies become mainstream, I expect someone at SARS will just copy and paste crypto tax legislation from a jacked up country overseas. Then it will be clear, definable, and the information will be made readily available for those of us who are worried about it.
 
I hear you guys, but...

Lets say you invested R50k in bitcoin and made four times that money back, thats R200k. Now you go and sell your litecoins and get the cash back and it goes back into your bank account. SARS has access to everyones bank accounts. You can get flagged for audits and i'm sure large amounts being deposited into bank accounts will raise flags for SARS audits (to catch people laundering money etc).

They are for sure going to wonder where the hell you are getting this R200k from. They will think you are earning income without declaring it, and i'm pretty sure they are going to force you to pay tax + interest + potentially fining you also.

To be safe, I think one should classify money made from selling crypto as normal income, meaning: if you make X per year from your day job salary, then when filing season comes, you should declare your income as X + crypto profits.

However, for now, ###ck them, I'm not declaring anything :P
 
What if I transferred R100k from by bank account to Luno, turned it into R200k in a month and then transferred the R100k profit back to my bank account. So the net movement in my bank account would be zero. Would that be flagged by SARS?
 
SaiyanZ said:
What if I transferred R100k from by bank account to Luno, turned it into R200k in a month and then transferred the R100k profit back to my bank account. So the net movement in my bank account would be zero. Would that be flagged by SARS?
Click to expand...

should not raise any flags, IMO
 
I will be following this thread as its a very important point that is raised. I have a considerable amount of money currently spread around 10 different crypto currencies on international exchanges as well as my Ledger wallet (none of them Bitcoin btw as I tend to keep to the 'smaller' coins). I am in no rush to convert any of this to fiat anytime soon as I am extremely bullish on the coins I own in 2018, but eventually I want to get this into my FNB home loan to get that paid off.
 
You know what they say about rumours...

Lunomoney told us a few months ago that Luno does not report any information to 3rd parties, including SARS.
 
FrEaKo said:
Hi guys,

I'm wondering how you guys are handling your profits w.r.t tax? AFAIK, any profits from crypto currency trading needs to be declared as income (not CGT) on top of whatever you are earning at the moment.

Anyways around it for now?
Click to expand...

I think Elsa taught us best how to handle SARS: "Don't let them in. Don't let them see. Be the good girl you always have to be. Conceal. Don't feel. Put on a show. Make one wrong move and everyone will know."
 
phaktza said:
I think Elsa taught us best how to handle SARS: "Don't let them in. Don't let them see. Be the good girl you always have to be. Conceal. Don't feel. Put on a show. Make one wrong move and everyone will know."
Click to expand...

:crylaugh:
 
Is it possible to even see your all time trade on luno?

Looks like you can only see for the current month?

Would be nice if they can issue some sort of tax certificate at the end of the financial year which summarizes your cash deposits and withdrawals
 
AFAIK, banks are obliged to report large deposits to the FSB (maybe also SARS).
However, most smaller deposits (someone told me < 50k) is unlikely to be flagged.

On another point, raised above, does Luno issue you with a yearly statement from which you can declare tax (if you so wish) ?
I mean, I've had different levels of capital in my account throughout the year, some trades made profit, some losses etc. etc.
 
Mier said:
AFAIK, banks are obliged to report large deposits to the FSB (maybe also SARS).
Click to expand...

Not sure about them reporting it but I do know that they may freeze large deposits until it is verified where it originated from. Have a friend in the oil industry and his first pay check got frozen until he verified the origin and reason for the deposit.
 
acidrain said:
Not sure about them reporting it but I do know that they may freeze large deposits until it is verified where it originated from. Have a friend in the oil industry and his first pay check got frozen until he verified the origin and reason for the deposit.
Click to expand...

Same, I got several transfers in the 50k-200k range blocked until I could provide the origin of the funds.
 
kab123 said:
Is it possible to even see your all time trade on luno?

Looks like you can only see for the current month?

Would be nice if they can issue some sort of tax certificate at the end of the financial year which summarizes your cash deposits and withdrawals
Click to expand...
That's a good point, something like the Itb34 or whatever it's called that the bank issues that shows the yearly total of interest earned etc.

If you don't have something like that how else would you work out total profit if you did countless different trades it would be a process to work out?

Also if you leave your money in the market/luno wallet then you can't pay tax on fictional profit, they can only tax you once the bitcoin is repatriated to your bank account and exchanged for fiat currency.
 
airborne said:
If you don't have something like that how else would you work out total profit if you did countless different trades it would be a process to work out?
Click to expand...

You would have to track it manually yourself. Unfortunately SARS will always say the onus is on you. Would be the same if an investment institution forgot to issue you your certificate ( not that it ever happens ) but the example is that if it did happen, it doesn't absolve you from tax responsibilities.
 
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