The South African Revenue Service (SARS) has said that it will soon provide some much-needed clarity on the tax implications for transferring and purchasing Bitcoin and other cryptocurrencies. They have advised that traders should declare in the meantime if they need to.
eNCA spoke to SARS about the ever-growing use of cryptocurrencies in the country. While SARS is treating cryptocurrencies as part of Capital Gains Tax, head of SARS tax research Randall Carolissen said they are still exploring it further.
“Because by the very nature it lends itself to money laundering and anonymised trading, so yes we have to put in and place additional regulations. And to that end, we are going to release an interpretation note from our legal department to guide taxpayers as to their implications with respect to this Bitcoin technology,” Carolissen told eNCA
SARS revealed that it is also working with top global technology companies that are doing similar work regarding crypto and tax. With block chains being incredibly difficult to monitor, the deductions will depend on what coin is used.
“Since it’s not legal tender it is treated as an asset in your hands. And depending on your intent with this asset, it can trigger different tax instruments. It can either be a revenue nature or it could be an asset, capital gains tax in nature,” Carolissen said.”
“People need to come forward and regualise their tax affairs with us. And the guideline will also assist them with that. But as and when you submit your tax returns you must declare that as either additional income or additional asset revenue realisation that you’ve had. So it’s very important that you don’t discard that or ignore that part. Especially those people who took advantage of Bitcoin in the early stages.”
By Nic Andersen for The South African