In late August, the South African Revenue Service (SARS) released new guidelines that clarify the correct treatment of taxable crypto events. The new guidance, which was published on the revenue collector’s webpage, explains how cryptocurrency-related income should be disclosed in tax returns.
Distinction Between Income and Capital Gains Tax
As shown on SARS’ crypto-asset tax webpage, “income received or accrued from crypto assets transactions can be taxed on revenue account under ‘gross income.'” Alternatively, the new guidance says such gains “may be regarded as capital in nature, as spelt out in the Eighth Schedule to the Act for taxation under the Capital Gains Tax (CGT) paradigm.”
SARS also reveals that “taxpayers are also entitled to claim expenses associated with crypto assets accruals or receipts, provided such expenditure is incurred in the production of the taxpayer’s income and for purposes of trade.”
Meanwhile, a tax consulting firm, Tax Consulting SA, told to Bitcoin.com News in an email that the publication of the guidance should perhaps be best viewed in the context of the various comments recently made by SARS on the taxation of crypto assets.
As previously reported by Bitcoin.com News, South African crypto holders found on the wrong side of the law now face possible jail time. Similarly, Tax Consulting SA asserts that the new crypto asset tax guidance is another reminder of how SARS now sees crypto tax as an important revenue source and the extent to which it will go to enforce compliance.
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