South Africa’s tax agency has told taxpayers that cryptocurrency-related income will fall under normal tax rules and may also be liable for capital gains tax.
The South African Revenue Service (SARS) has reminded taxpayers that the onus is entirely on them to declare cryptocurrency gains or losses as part of their taxable income. Crypto-related gains or losses can occur through mining or trading, purchasing cryptocurrency at exchanges and their usage as payments in transactions, the taxation agency said on Friday.
While cryptocurrencies aren’t seen as a ‘currency’ by SARS for income tax purposes, they are deemed as ‘assets of an intangible nature,’ SARS clarified. Gains from cryptocurrency-related investments and holding ‘may be regarded as capital in nature’ in certain scenarios while taxpayers are also entitled to claim expenses and deductions from cryptocurrency accruals or receipts.
While SARS says it has fielded calls from the public to provide clarity on cryptocurrencies for taxation purposes, the tax agency insists that standard rules apply. “There is an existing tax framework that can guide SARS and affected taxpayers on the tax implications of cryptocurrencies, making a separate Interpretation Note unnecessary for now,” the tax agency said.
Pointedly, it added:
The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.
For miners, specifically, successfully mined coins will be deemed as ‘trading stock’ until it is sold or exchanged for cash, according to the notice.
Furthermore, the tax agency clarified that it would not include a value-added tax (VAT) for cryptocurrency sales although the policy will come under review during the 2018 annual budget.
Featured image from Shutterstock.
Follow us on Telegram.