SARS is chasing taxpayers with these assets

The South African Revenue Service (SARS) has published the latest guidance notes on how to handle crypto assets in South Africa, and taxpayers must declare them in returns.

This memo should probably be seen in the context of various recent comments made by SARS regarding the taxation of crypto assets, perceived breaches by crypto asset holders, and how seriously SARS takes breaches, legal affairs. Manager Thomas Roban says: Cryptocurrency taxation at Tax Consulting SA.

Below, he outlines some important points of the new guidance and what taxpayers generally need to know as SARS targets crypto assets.

SARS has created a special place to declare that you own crypto assets

A common misconception is that if you simply own crypto assets but are not trading, you do not need to disclose them to SARS, Roban said.

He said the 2020/21 tax return would require specific disclosures in the “Statement of Local Assets and Liability” section.

“As a result, all individuals who acquire and hold crypto assets during the tax year must disclose their holdings to SARS in return, regardless of whether a taxable event has occurred.

“This is easy to make mistakes, so taxpayers need to be careful.”

If you fail to make this disclosure, Mr. Roban said, it is now a criminal offense under the Revenue Agency Act.

Income tax and capital gains tax continue to be confused

In countries where income tax and capital gains tax are subject to the same tax rate, the nature of transactions and investments is not important, Roban said.

“In South Africa, the maximum personal income tax rate is 45% and the maximum capital gains tax rate is 18%, which is a very important point.

“Given the extreme volatility, cryptocurrencies are likely to be retained as profitable speculative assets,” the SARS CGT Guide states. This is probably true in general, but not always. “

Nonetheless, the guidance information released earlier this week only gives an example of capital gains tax disclosure, Roban said.

“There is no example of income tax disclosure, which means that just following the guidance provided by SARS can put taxpayers behind the law.”

The importance of compliance

There is no legal way for crypto investors to remain “invisible” from a SARS perspective. Many may deny this, but SARS will continue to sharpen, Roban said.

“Currently, even if you don’t disclose correctly, non-disclosure is permanent and will come back within a few years to catch up with taxpayers.

“SARS has appointed a crypto asset expert, but the market has not been prosecuted in this tax area.”

But there is one thing for sure. It’s no longer enough to hide it inconspicuously, Lobban said.

Cryptocurrency holdings (as well as profits and losses) must be declared in returns. Soon you will see the circle of justice change quickly for those who are slow to capture.

read: Foreigners are withdrawing money from South Africa, JSE warns

SARS is chasing taxpayers with these assets

Source link SARS is chasing taxpayers with these assets

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