Crypto currencies have become increasingly more popular with investors around the world. This has not gone unnoticed by revenue services and SARS, and National Treasury here in South Africa is no exception.
National Treasury and SARS officially refer to crypto currency as “Crypto Assets”.
Question: Are crypto assets taxable?
Answer: Yes, SARS will continue to apply normal income tax rules to crypto assets and expect affected taxpayers to declare crypto asset gains and losses as part of their taxable income.
Question: Are crypto assets considered legal tender by SARB and SARS?
Answer: No
Question: When were crypto assets introduced into the Income Tax Act and the VAT Act?
Answer: 17 January 2019 and 1 April 2019 respectively
Question: When is tax levied?
Answer: At the disposal of a crypto asset and at the acquisition of a cryto asset as consideration.
Question: What is the definition of the disposal of a cryto asset?
Answer: The event, act, forbearance or operation of a law that results in the creation, variation, transfer or extinction of an asset. Examples of this in Crypto Asset terms would be the exchange of one crypto asset for another, the sale of the cryto asset for money or the loss of key.
Question: What is the definition of an acquisition of a crypto asset as consideration?
Answer: Essentially this is the acquisition of crypto assets from staking coins or from crypto mining or similar activities.
Question: What are the tax rates on crypto currency revenue?
Answer: Income Tax can be up to 45% for individuals and, in the case of a Capital Gain, up to 18% effective rate for individuals. However, given the extreme volatility of crypto assets, they are most likely held as speculative assets of a revenue nature.
Question: Do income tax documents require specific disclosure of crypto assets?
Answer: Yes, the ITR12 requests your disclosure of crypto assets and provides source codes for crpyto asset submissions.
The 2021 Budget Review allocated R3 billion to SARS to increase their technological capabilities and technical staff expertise in anticipation of the expected crypto asset taxation. SARS has already begun to audit taxpayers even though no crypto assets may have been declared. SARS have gone so far as to create a specilaised unit focusing on offshore assets and cryto assets.
If you would like more information on the impact of your crypto asset portfolio on your income tax contact the Waykim Group on 031 940 4145 or email info@waykimgroup.co.za