South African Revenue Services, the tax authority of South Africa has made it a mandate for everyone to declare cryptocurrency gains in the taxable income. Everyone taxpayer will have to ensure that all cryptocurrency related taxable income is declared in the tax year when it is received. In case, the taxpayer fails to pay tax on cryptocurrency; he will have to face penalties and interests on the same.
SARC Sheds Light on Paying Tax on Cryptocurrency
The tax authority acknowledged that many taxpayers are calling to gather more details on how to treat cryptocurrency tax reporting. However, South African Revenue Services says that a separate interpretation would not be required as of now. It has instead shed some light on how it falls under the current framework. If you are also uncertain about specific transactions involving cryptocurrencies, you may seek guidance from the agencies.
South African Revenue Services considers cryptocurrency as the assets of intangible nature, rather than viewing it as a currency for income tax purposes or Capital Gains Tax. The income received or accumulated from crypto trading can be taxed on revenue account. In case, the services or goods are exchanged for cryptocurrencies, transactions are considered as a barter.
Tax on Cryptocurrency Comes With A Benefit
On the brighter side, the taxpayers in South Africa can also take advantage of the claim expenses that are associated with cryptocurrency accruals. However, as per South African Revenue Services, such expenditure is encountered in the production of the taxpayer’s income and for purposes of trade. In addition to this, South African Revenue Services will not require VAT registration as a vendor for cryptocurrency supply in 2018.
SARS has explicitly mentioned that it has become obligatory for everyone to report crypto transaction and pay tax on cryptocurrency. Traders should not assume that SARS is not looking for other ways to find out about such trading activities and operations. In December, SARS explored multiple ways to track and tax Bitcoin trading.