Sending USD to US

[Pho3nix]

This is exactly what he's doing, and SARS & SARB already know about this trick. There are two problems with doing it:

1) It is in contravention of exchange control regulations (they call it a "loop structure" and it's explicitly not allowed).
2) When they pick it up (and they do eventually, trust me), you will get nailed with marginal tax rate on the amount received in your bank account, without being able to offset the cost of the purchase of the BTC overseas.

So you buy R500K worth of BTC overseas, send it back here and R600K goes into your bank account. Suddenly you're smashed with 45% (or whatever your marginal rate is) on that R600K.

The above is the reason there appears (at first sight) to be an arbitrage opportunity. If there is one, it certainly isn't via your discretionary/foreign investment allowance.

Technically BTC isn’t currency? Isn’t this slightly more complicated because it’s a crypto?

 

[JayM]

But what if you buy R500k overseas, sell R500k locally and keep the change in btc?

The R500K is going to appear as straight income, so you'll still get taxed on R500K.

 

[JayM]

Wait a second, wouldn't this be taxed on top of your normal income tax?

Yes, I should have been more clear, it will be taxed at your marginal rate, and if that isn't at the maximum, it could push part of the amount into the next tax bracket.

 

[Pho3nix]

Yes, I should have been more clear, it will be taxed at your marginal rate, and if that isn't at the maximum, it could push part of the amount into the next tax bracket.

So basically like any other investment you don't hold for longer than 2(?) years?
Side note : Would Forex Trading also fall into the same realm? What I'm not getting is I'm putting money in.. why aren't I only being taxed on the profit on that? Also Crypto isn't "technically" a currency here, why would this be a violating exchange control?

 

[JayM]

So basically like any other investment you don't hold for longer than 2(?) years?
Side note : Would Forex Trading also fall into the same realm? What I'm not getting is I'm putting money in.. why aren't I only being taxed on the profit on that? Also Crypto isn't "technically" a currency here, why would this be a violating exchange control?

Forex trading is 100% OK as there is no back door "loop structure" as SARB calls it. Using discretionary/foreign investment allowance to buy BTC (or anything that reinvests in any SA securities) creates this structure. Unfortunately you cannot offset the purchase of the BTC against the profits made - when you try do your tax return and declare way less than what goes into your bank account, you will get audited and will be referred to the above rule. On top of the tax, you'll probably have to pay a penalty as well.

 

[*SynergyX*]

The R500K is going to appear as straight income, so you'll still get taxed on R500K.

for some reason this doesnt make clear sense... maybe i need a better explanation.

i.e lets say if i transfer 500k to my own standardbank acccount from my own fnb account and 2 months later i transfer it back to my fnb account. is this now seen as 500k income and im going to get taxed on it?

 

[JayM]

for some reason this doesnt make clear sense... maybe i need a better explanation.

i.e lets say if i transfer 500k to my own standardbank acccount from my own fnb account and 2 months later i transfer it back to my fnb account. is this now seen as 500k income and im going to get taxed on it?

Of course not, unless you cannot account for where it came from in the first place. What I'm saying is going with "I used my discretionary/investment allowance to buy USD and then BTC which I then transferred to an SA BTC account and sold it for ZAR" is going to get you into trouble with either SARS, SARB, or both.

 

[Zukat]

Of course not, unless you cannot account for where it came from in the first place. What I'm saying is going with "I used my discretionary/investment allowance to buy USD and then BTC which I then transferred to an SA BTC account and sold it for ZAR" is going to get you into trouble with either SARS, SARB, or both.

But according to SARB they dont recognize BTC as currency, it will be treated as if you invested in stock overseas and then realized profit from it?

 

[JayM]

But according to SARB they dont recognize BTC as currency, it will be treated as if you invested in stock overseas and then realized profit from it?

This is not relevant; in any case you are not allowed to sell your overseas shares which you bought in USD for ZAR. You're not allowed to buy foreign financial instruments which invest back in SA with those funds either (unless you become non-resident or formally emigrate).

You guys are welcome to knock yourselves out, but this is one of those "too good to be true" things. You have been warned.

 

[kab123]

This is not relevant; in any case you are not allowed to sell your overseas shares which you bought in USD for ZAR. You're not allowed to buy foreign financial instruments which invest back in SA with those funds either (unless you become non-resident or formally emigrate).

You guys are welcome to knock yourselves out, but this is one of those "too good to be true" things. You have been warned.

Interesting. I'm no expert in this field so I do take your point seriously.

Is there perhaps any official sarb/sars rule that one can correlate directly to bitcoin arbitrage?

You are not using usd to buy btc. You are still using ZAR?

Not arguing. Just enquiring for my own info

 

[kab123]

As far as I can tell arbitrage is not illegal in most developed countries. It is encouraged. Although it's not really feasible. And if it is, it only remains so for a short while until prices converge.

So my question is where can one find a official stance on arbitrage for whatever commodity in RSA?

 

[JayM]

Interesting. I'm no expert in this field so I do take your point seriously.

Is there perhaps any official sarb/sars rule that one can correlate directly to bitcoin arbitrage?

You are not using usd to buy btc. You are still using ZAR?

Not arguing. Just enquiring for my own info

There is no rule against arbitrage. Exchange control regulations are the problem here. If you can go ZAR->BTC->ZAR no problems at all (but you must still pay the income tax unless you hold the BTC long enough to declare it as a capital gain).

 

[elL0L]

This is not relevant; in any case you are not allowed to sell your overseas shares which you bought in USD for ZAR. You're not allowed to buy foreign financial instruments which invest back in SA with those funds either (unless you become non-resident or formally emigrate).

You guys are welcome to knock yourselves out, but this is one of those "too good to be true" things. You have been warned.

Who said Bitcoin is a financial instrument?

 

[Viper25]

https://mybroadband.co.za/news/cryp...-the-law-and-buy-bitcoin-in-south-africa.html

As long as within the 1 mill cap, Sarb is fine with sending USD overseas to buy bitcoin

 

[retromodcoza]

It should also be pointed out that the repatriation of value through VCs is not acknowledged as a repatriation of an individual’s single discretionary allowance

This line from the SARB is the reason for existence of the arbitrage opportunity in the first place.

Outgoing funds are counted towards the single discretionary allowance. Incoming funds are not. As others have found out , you quickly run out of your limit to send funds out of the country (1m). Its 1m max for everyone , because the 10m FIA is denied for crypto purchases by the SARB on application. We tried to get the FIA from the SARB and were denied.