South Africans, along with other parts of the world, are showing a desire for cryptocurrencies. The size of the market remains unknown, but Coinmarketcap shows $ 210 billion in the global market and about R $ 6.5 billion in the South African market.
The real numbers remain a mystery, but what is certain is that the South African Revenue Service (SARS) is very much involved in cryptocurrency trading from that perspective, Tax Consulting South Africa’s cross-border taxation legal manager. Said Thomas Lobban.
“Bitcoin and other cryptocurrencies have recorded significant growth over the past year or more. For example, Bitcoin has increased by about 224% in 2020. Given these returns, South Africans are cryptocurrencies. Of course, we see it as an investment opportunity, but few people are aware of the tax implications of such a move, “Roban said.
“As with any asset class, investors need to understand the tax obligations associated with crypto investments and plan accordingly, or they may face unwelcome tax bills.”
SARS’s interest in potential tax revenues from cryptocurrencies has certainly been strengthened by this year’s budget, and Minister Tito Muboweni has increased its budget allocation to SARS by R3 billion that year.
Wealthy, offshore investors, crypto investors Behind this additional budget allocation, it is clearly targeted as an area that is likely to generate much of the additional tax that is required to be collected by SARS.
However, many taxpayers are unaware of the fact that trading in cryptocurrencies makes them liable for taxes, or when and how their cryptocurrency profits are taxed.
Depending on how and why the transaction takes place, some cryptocurrency transactions are considered capital in nature and may only be subject to capital gains tax. However, other transactions are taxed because they are considered to be profitable in nature. According to the taxpayer’s normal tax rate according to the tax rate table.
“Based on working with clients, it’s clear that there is a big misconception that’tax events’ only occur when cryptocurrencies are withdrawn and converted to fiat currencies, but that’s not true. For example, if a transaction is made between Bitcoin and Ethereum, the expected profit of the transaction will also be taxable, “Roban said.
“There is no law yet that forces clients to report on crypto platforms outside the general provisions of relevant tax laws, such as financial service providers, but the wall is closing rapidly.”
SARS has already begun seeking information on cryptocurrency transactions in audit letters issued to taxpayers. This means that non-compliant taxpayers need to lie (and risk additional fines and refund taxes later) or reveal their transaction history. Not providing an accurate answer constitutes a criminal offense, Roban added.
In addition, SARS has invested heavily in IT capabilities, enabling more effective analysis of financial and transaction data to identify transactions in and out of crypto platforms. Using a foreign bank account is not a solution, as South Africa is a party to a number of agreements that allow automatic reporting between jurisdictions.
“We are all creating digital trucks online and there is really no place to hide. SARS ensures that we take a zero-tolerance approach to all tax evasion,” Roban said. I am. “But I must also say that with proper planning, paying taxes does not make your investment in cryptocurrencies unprofitable.”
SARS comes after these three tax streams
Source link SARS comes after these three tax streams