South Africa’s SARS expects its citizens to declare their cryptocurrency income for tax purposes

Cryptocurrency tax

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Tax agencies are going after cryptocurrency investors to ensure that they submit their tax returns. The latest tax agency to make the move is the South African Revenue Service which has announced that it expects all the citizens who have invested in cryptocurrency to declare their crypto gains as part of their taxable incomes. According to SARS the responsibility or disclosing crypto information is on the taxpayers, and that failure to do so would result in interests and penalties.

The South African tax agency has already acknowledged that they have received many calls from their citizens asking for information on how to treat cryptocurrency tax. The agency has stated that they are yet to separate or interpret the digital currencies and therefore they will not treat it as special. The agency has however explained that for now it will fall under the current framework and they would provide more information to the interested parties.

SARS went ahead to explain that digital currencies will not be treated as a currency for capital gains tax or even for income tax purpose but they will be treated as assets on intangible nature. More to that they stated that even though cryptocurrencies do not contribute cash income collected from crypto transactions can be taxed under the gross income. More to that SARS clarified that when goods or even services are exchanged using cryptocurrency the transaction will be treated as barter.

The tax agency went on to state that South African taxpayers were also entitled to claim any expenses associated with crypto accruals as long as the expenditure is incurred in the production to taxpayers income or is used for the purpose of trade. More to that the agency will not expect VAT registration for the purpose of supply of digital currencies in this year.

SARS concluded by stating that even though the onus was on the taxpayers to disclose their cryptocurrency transactions the agency is also looking for other ways to investigate the transactions. Reports emerged in December 2017 that SARS was looking for ways to track Bitcoin transactions for tax purposes. To make the steps a reality the agency held many talks with different tech companies which had the ability to implement the transaction tracking solutions and services to the agency.

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