SARS wants to track and tax Bitcoin trades

Archer said:
Yes, those are costs directly related to being able to produce the income. I hope you've kept records of electricity costs as well.

At least this is what I'll be trying come tax season next year
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So lets say I traded and made 100% return. Do I get to offset any expenses?
 
SaiyanZ said:
So lets say I traded and made 100% return. Do I get to offset any expenses?
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You can only be taxed on gains. Conversely, losses can be used to offset gains. The tricky part for crypto is many people trade against BTC, so what will SARS consider a gain/loss? More BTC, or more USD/ZAR value. I would hope it's the latter. This is all basically speculation though, I haven't personally tried any of this

Arthur said:
Only if you're a registered trader or demonstrably doing it as a business.
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Don't need to be registered afaik?
 
morkhans said:
So how would tax work on crypto you mined? Do you get to offset the hardware input costs?
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This is why I say that you will only ever be taxed on coins you cash out. At some point someone is going to cash out and pay tax on that.

Alternatively if you purchase property or high value items (House/Car) with Bitcoin you will either have to pay fees or licences on that item which will expose the sale to SARS.

If we trade coins between each other for services or low value items for example there would be no reason for SARS to track or even charge you a Rand based tax amount.
Unless they start taxing you in Bitcoin ? How will they know how much to tax you for ? The value of the coin at the time or the current value ?

Its not actually money until you cash it out.
 
SaiyanZ said:
So lets say I traded and made 100% return. Do I get to offset any expenses?
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The interesting part could be the difference in how you traded. If you traded back and forth between Rands and BTC then I imagine the accumulated profit/loss on those trades has a clear tax implication, whereas if you traded between BTC and other cryptos, for e.g. on a foreign exchange, things probably get murkier. I guess the question is whether every trade to cash from BTC ON the exchange is the same thing as withdrawing cash from the exchange.

SARS is essentially treating most BTC sales as a realisation of assets incurring CGT (like selling Krugerrands) although if you're demonstrably a trader then the profit is liable for income/company tax. But the question will be whether buying BTC once for cash, sending it to another exchange somewhere and constantly trading BTC/ETH, BTC/LTC, etc etc resulting in an increase in your overall holdings and sometime later returning it as BTC to Luno and cashing it out in a single transaction will be construed as trading or investing. And then actually providing a record of those transactions - working out the prevailing prices at the time, exchange rate, etc etc, would be an accounting nightmare.
 
garp said:
The interesting part could be the difference in how you traded. If you traded back and forth between Rands and BTC then I imagine the accumulated profit/loss on those trades has a clear tax implication, whereas if you traded between BTC and other cryptos, for e.g. on a foreign exchange, things probably get murkier. I guess the question is whether every trade to cash from BTC ON the exchange is the same thing as withdrawing cash from the exchange.

SARS is essentially treating most BTC sales as a realisation of assets incurring CGT (like selling Krugerrands) although if you're demonstrably a trader then the profit is liable for income/company tax. But the question will be whether buying BTC once for cash, sending it to another exchange somewhere and constantly trading BTC/ETH, BTC/LTC, etc etc resulting in an increase in your overall holdings and sometime later returning it as BTC to Luno and cashing it out in a single transaction will be construed as trading or investing. And then actually providing a record of those transactions - working out the prevailing prices at the time, exchange rate, etc etc, would be an accounting nightmare.
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Maybe SARS will just hit you with the notice and it's up to the individual to prove what really happened.
 
Fake news - they don’t have the capacity to do this.
They have bigger fish to catch.
 
Hypothetically asking. Say i build a mining rig and mine etherium to a coinbase wallet directly. At the same time I also have a Luno wallet. Once i send the ether to my luno wallet does it become taxable once i convert to ZAR and tfr to my bank account? How do they know were the ether came from if i didnt use ZAR to buy it and
then made gains with the price increasing?
 
Torch_18 said:
Hypothetically asking. Say i build a mining rig and mine etherium to a coinbase wallet directly. At the same time I also have a Luno wallet. Once i send the ether to my luno wallet does it become taxable once i convert to ZAR and tfr to my bank account? How do they know were the ether came from if i didnt use ZAR to buy it and
then made gains with the price increasing?
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To make a case for CGT you will have to show a purchase transaction in the past. I suspect that in the absence of this they will deem it earned income instead.
 
garp said:
To make a case for CGT you will have to show a purchase transaction in the past. I suspect that in the absence of this they will deem it earned income instead.
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Makes sense. There's no original capital investment, so there can't be capital gain.
 
3lOH55A said:
When last did you work?
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four years ago, was audited for 6 years in a row or something stupid, only this year I was not audited but I recently found out my bank account has been monitored since 2014
 
saturnz said:
four years ago, was audited for 6 years in a row or something stupid, only this year I was not audited but I recently found out my bank account has been monitored since 2014
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That will happen yes. If you're submitting X every year and suddenly that has changed drastically the system will flag you.
 
3lOH55A said:
That will happen yes. If you're submitting X every year and suddenly that has changed drastically the system will flag you.
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the irony, but a topic for another discussion
 
Something interesting I've been wondering about. So SARS has every right to tax gains on BTC, but what if I make a loss? You can bet your banana that if you claim losses on BTC trades (reduce your taxable income) you will be audited.

So what documentation do you provide? Luno definitely does not send out IT3(b)s, and I seriously doubt SARS will accept the bank statement transactions as proof.

Also, is BTC treated as a security investment or a forex trade? Because the tax effects thereon are very different.
 
What is defined as making money on Bitcoins for to be taxed-?

Example:I invest in bitcoin, the promise of money to me go up & up, so the promised value went up, however I would not know for certain how much I earned until I revert it to cash in my bank account, then they/me could see my profit earned. Now this could be after 10 years of investment-?.

Example:I invest over years in bitcoin, but never cash out the investment to my bank account. Now if they tax me yearly on the promised earnings, but not cashed out, and now 10 years later the market fall flat I loose everything, cash out zero....How is this going to play out-? In this case I paid a load of tax, but in reality did not earn a cent-?

How, when/period are they going to tax-?
 
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