SARS Profit Tax

airborne said:
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.
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On Luno you have two wallets a ZAR wallet and a BTC one.

If you deposit 100K into the ZAR wallet then buy BTC. A month later you sell your BTC and now have 200K in your ZAR wallet. 100K profit. My assumption is at this point you still don't have to pay any tax. Only when you move that money from your ZAR wallet to a bank account will you need to pay tax on the 100K profit you made.

Is this how you understand this?
 
matela said:
On Luno you have two wallets a ZAR wallet and a BTC one.

If you deposit 100K into the ZAR wallet then buy BTC. A month later you sell your BTC and now have 200K in your ZAR wallet. 100K profit. My assumption is at this point you still don't have to pay any tax. Only when you move that money from your ZAR wallet to a bank account will you need to pay tax on the 100K profit you made.

Is this how you understand this?
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Interesting question. I would imagine it comes down to what SARS considers your ZAR account on Luno to be. I have a feeling they might deem it no different from a bank account, in which case you'd incur tax on any profit regardless of whether you withdraw from the exchange.

But the waters get muddier if you buy BTC on Luno, transfer out to a foreign exchange (or even to a wallet where you can trade between cryptos with shapeshift) where you can essentially do the same thing and hold your FIAT in USD between trades.
 
garp said:
Interesting question. I would imagine it comes down to what SARS considers your ZAR account on Luno to be. I have a feeling they might deem it no different from a bank account, in which case you'd incur tax on any profit regardless of whether you withdraw from the exchange.
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In that case SARS will need to be able to look into your Luno account to do these calculations. Or you might have to submit it as supporting documentation when you do your return. This will surely make things very complicated. Profit per trade.

garp said:
But the waters get muddier if you buy BTC on Luno, transfer out to a foreign exchange (or even to a wallet where you can trade between cryptos with shapeshift) where you can essentially do the same thing and hold your FIAT in USD between trades.
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Where can you hold your USD between trades? I use Poloniex and Bittrex and they just support USDT. Would love a place to have a FIAT USD account to put money in if I expect a dip in the markets since USDT is getting a lot of heat in the media at the moment which worries me a bit to use it.

I will only aim to only declare profits that I bring into my bank account out of Luno. And only money I cash out of Luno which was more than I put in initially. Trying to explain all the other movement and trades to SARS will only cause problems.
 
matela said:
Where can you hold your USD between trades? I use Poloniex and Bittrex and they just support USDT. Would love a place to have a FIAT USD account to put money in if I expect a dip in the markets since USDT is getting a lot of heat in the media at the moment which worries me a bit to use it.

I will only aim to only declare profits that I bring into my bank account out of Luno. And only money I cash out of Luno which was more than I put in initially. Trying to explain all the other movement and trades to SARS will only cause problems.
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On many of the exchanges, i.e. Bitfinex, you have a dollar wallet. Bitfinex can't transfer dollars in/out, but if you sell BTC for USD your $ wallet will be credited. Otherwise, there is USDT which is supposedly backed by dollars, but there is a huge question mark over whether it is legit.
 
garp said:
On many of the exchanges, i.e. Bitfinex, you have a dollar wallet. Bitfinex can't transfer dollars in/out, but if you sell BTC for USD your $ wallet will be credited. Otherwise, there is USDT which is supposedly backed by dollars, but there is a huge question mark over whether it is legit.
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Well, Bitfinex and Tether has one in the same person as acting CEO of the companies. Do they really use a dollar wallet or is it also pegged against the ticking time bomb which is tether?...
 
cyb3rt said:
Well, Bitfinex and Tether has one in the same person as acting CEO of the companies. Do they really use a dollar wallet or is it also pegged against the ticking time bomb which is tether?...
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Good question - no idea. Assuming it's some kind of book entry, and you would have sold for USD that another user paid, so in theory it's a transfer from the seller's USD account. Whether they're actually fully backed by USD is as much of a question as if any of the other currencies are backed.
 
How do I get an IT3 from Luno to submit to SARS ?
 
Funny how people in this thread thinking of ways not to pay tax. It's fraud and a criminal offences to hide from SARS. I posted this in the other thread:



I would like to add my knowledge to how cryptos are taxed in South Africa. I know this as I have engaged with many Tax professionals.

1) A tax event will occur if you dispose of any crypto. Crypto disposal means if you sell your crypto back to ZAR, if you trade your crypto for any other crypto (including LP tokens), if you withdraw your crypto or if you pay somebody in crypto. To calculate the gain/loss it is the disposal value of the asset minus its base cost (what you bought it for in ZAR).

2) You need to hold a crypto for at least 3 years for it to be considered a capital gain otherwise it will be taxed as income tax. Buying high and selling low will be regarded as income tax(unless you doing it every 3 years of course).

3) Staking rewards, airdrops, mining rewards are all taxed as income tax. To calculate, it is the price of the assets when you received it. This will set the new base cost of that assets.

4) Lending out crypto, like in Luno savings wallet is a grey area, and may count towards your annual interest that is exempt from tax. R23 800 per individual per year.

5) Crypto losses, depending on the circumstances, may be used in a ring-fencing method.

6) Go get advice from an accountant as they have software that can assist in collecting all the data and it will calculate your gains/losses etc.

7) I highly recommend that you start declaring your gains. Because when you do decide to cash out there are going to be questions as how you acquired it or show me your trade paths. Why did you not declare over the last multiple years? Etc etc. SARS has the ability to screw you down the line.

8) When you make a gain, store a % of it in stable coin or ZAR and keep it aside. This can be used to pay tax. If you earning more income other than your normal job you HAVE to register as a provisional tax payer and you will need to calculate how much you expect to make as SARS can fine you if you give wrong assumptions.
 
Fashion Sandwich said:
Funny how people in this thread thinking of ways not to pay tax. It's fraud and a criminal offences to hide from SARS.
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I don't trade or invest in crypto, but I always thought the whole point of crypto is to circumvent government structures and control. I can understand if you exchange it to ZAR or USD Etc. you are back into the government system and need to play by their rules, but trading crypto for crypto and then still pay tax kind of defeats the purpose for me. I am not saying it is right, I am just saying it is kind of pointless for me.

But, you make some good points and I do agree avoiding paying tax to the box, because we are all in the box, is looking for trouble and might have you end up in the prison box.

I'd rather pay my tax and live the best life I can with what is left over, than having lots of wealth but labeled a criminal. But even then, the box will decide whether it is still going to find a way to screw you over.
 
Probably one of the most informative link I've seen regarding tax:

Very difficult to keep declaring gains if you keep it on the exchange, and use it to buy other coins or stake.
As that's the objective, stake the gains and earn passive income, and then declare once you cash out?
SARS is not there for your losses so a gain today can equal a loss tomorrow.

businesstech.co.za

Taxing crypto assets at 45% in South Africa – what you should know

SARS is tightening tax collection on cryptocurrency transactions, which makes it important to distinguish between events that will trigger income tax rates or Capital Gains Tax rates, say legal experts at Webber Wentzel.
businesstech.co.za businesstech.co.za
 
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