The tax authority of South Africa has officially come out with a decision where it has warned taxpayers in the country against forgetting to report all their cryptocurrency transactions. The authority told that there would be consequences if the taxes on crypto gains are not filed. However, it also presented a framework with a few positive points for those trading cryptocurrencies such as the ability to claim expenses and losses.
The South African Revenue Service (SARS) made a statement,
“The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.”
The cryptocurrency-related income will fall under normal tax rules and may also be liable for capital gains tax. Crypto-related gains or losses can occur through mining or trading, purchasing cryptocurrency at exchanges and their usage as payments in transactions,
SARS clarified that they see cryptocurrencies as assets of an intangible nature,” rather than any “currency”. And, that “Whilst not constituting cash,” income received or accrued from cryptocurrency transactions can be taxed on revenue account under “gross income”. When goods or services are exchanged for cryptocurrencies transactions are regarded as a barter.
One good news being that the South African taxpayers are entitled to claim expenses associated with cryptocurrency accruals, “provided such expenditure is incurred in the production of the taxpayer’s income and for purposes of trade.”
SARS will not require VAT (Value-Added Tax) registration as a vendor for purposes of the supply of cryptocurrencies in 2018.
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