At the end of August, the South African Revenue Service (SARS) published new guidelines that clarify the correct handling of taxable crypto events. The new guide, published on the tax collector’s website, explains how cryptocurrency-related income should be disclosed in tax returns.
Differentiation between income tax and capital gains tax
As shown on the SARS Crypto Asset Tax website, “Income from crypto asset transactions can be taxed on the income account under ‘Gross Income’. as set out in the eighth appendix of the Act on Taxation According to the Paradigm of Capital Gains Tax (CGT). “
SARS also reveals that “Taxpayers are also entitled to recover expenses related to the accumulation or ingestion of crypto-assets, provided that those expenses are incurred in the pursuit of taxpayer income and for trading purposes.”
Meanwhile, a tax consultancy firm, Tax Consulting SA, told Bitcoin.com News in an email that perhaps the publication of the guidelines should be best seen in the context of SARS ‘various comments 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 potential jail sentences. Similarly, Tax Consulting SA claims that the new policy on taxation of crypto assets is another reminder of how SARS is now viewing the crypto tax as a major source of income and the extent to which it will enforce compliance.
The cost of non-disclosure
As a result, the team at Tax Consulting SA says in its analysis of the new guidelines: “All persons who have acquired and held crypto assets during the tax year must disclose these holdings in their declarations to SARS, regardless of whether any taxable events have occurred” . However, the team warns that “this can be easily done wrong and taxpayers should definitely exercise caution”. Tax Consulting SA also warned:
If you negligently fail to make this disclosure, this is now a criminal offense under the Tax Administration Act.
With regard to the “confusion” as to whether a taxable transaction is to be treated as income tax or capital gains tax, the consultancy insists that the “published information” [by SARS] There are only examples of capital gains tax disclosures earlier this week. ”Since the tax collector did not give any examples of income tax disclosures, it means“ Taxpayers can fall on the wrong side of the law simply by following SARS’s directions “.
Despite this lack of clarity, however, Tax Consulting SA insists that crypto owners still have to disclose because “there is no legitimate way for crypto asset investors to remain ‘invisible’ from a SARS perspective”. The company argues that “the non-disclosure is permanent and [that this] will come back in a few years to catch up with the taxpayer. “
What do you think of SARS ‘latest crypto tax policy? Let us know what you think in the comments section below.
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