How Luno helps South Africans pay their Bitcoin tax

Many South Africans have invested in cryptocurrencies, and some have managed to make fair returns on their investments.

Declaring their earnings to pay tax is now the next step they must take.

Calculating tax on Bitcoin earnings is not straightforward, but SARS has stated it the responsibility of the investor to declare their taxable earnings.

Either capital gains tax or income tax will apply to your cryptocurrency earnings, depending on whether you traded regularly or held tokens for a long period of time.

Acquiring records of cryptocurrency trades might not be simple in all cases, however, and determining the amounts which should be taxed can be tricky.

Fortunately, many South Africans use Luno to trade cryptocurrency, and the exchange explained to MyBroadband how it is helping users.

Transaction history

Luno said it provides every customer with the option to download their digital currency transaction history in CSV format.

This information can be used to calculate gains or losses, and justify a qualification under capital gains tax for long-term investments – or income tax for regular trading practices.

While traditional investment platforms often provide users with tax certificates outlining the tax payable, Luno said it would not provide tax certificates to users.

This is because tax is calculated on multiple factors.

“We do not plan to issue tax certificates, as each customer will have different circumstances and will have to declare their gains as either income or capital of nature,” said Luno.

Uncertainty remains as to how long investors must hold a cryptocurrency to qualify for capital gains tax, and whether trading Bitcoin for other cryptocurrencies affects this measurement.

“Luno customers and digital currency traders and investors are advised to consult with tax professionals to help them best apply the existing tax framework to their circumstances.”

Luno added that its operations would not be affected by tax on cryptocurrencies.

“SARS’ guidance note on the taxation of digital currency gains and losses will not have an impact on the functioning of Luno, as it merely provides much-needed clarification to taxpayers that they are obliged to declare all gains and losses,” said Luno.

“This is the general position most tax authorities around the world have taken.”

Now read: Hacker steals over R4 million from MyEtherWallet users

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How Luno helps South Africans pay their Bitcoin tax