Photo: Pixabay
Photo: Pixabay
Tax experts are now warning those who have invested in the crypto market that they ‘could be sanctioned by SARS’ if they fail to declare their earnings. The likes of Bitcoin, Dogecoin, and Ethereum are all trading handsomely online, but for South Africans profiting from the digital currency, the taxman is also taking an interest in your eWallets…
Do I need to pay tax on cryptocurrency?
Thomas Lobban, a Legal Manager for Cross-Border Taxation, said this week that cryptocurrency owners in South Africa mistakenly believe that their cyber profits are already subject to Capital Gains Tax. This isn’t the case, however, and the Tax Consulting SA representative believes that SARS is looking ‘to make examples’ out of non-compliant earners:
“In the overwhelming majority of cases, taxpayers have been advised by a tax practitioner that their cryptocurrency profits will be subject to capital gains tax (“CGT”) rather than a normal tax. CGT is levied at a lower effective rate to normal tax, but crypto is not subject to CGT in most cases.”
“While we are not aware of any convictions secured [for failing to pay tax on cryptocurrency earnings] yet, one may presume that SARS will soon be looking to make examples.” | Thomas Lobban
Crypto raid: SARS looking for ‘Bitcoin Bounce’
To be on the safe side, crypto owners have been told to remain compliant, and ‘approach SARS first’ to declare any profits or losses they’ve made with their earnings. A failure to notify the tax agency could lead to serious litigation:
“It is crucial that taxpayers make sure to meet their obligations and remain compliant. In order to stay in SARS’ good books and avoid sanction, investors should approach SARS first and declare crypto profits and losses in their returns.”
“For outstanding historic tax liability, there are avenues for correction without the thread of criminal liability; however, the options available to taxpayers become severely limited once SARS notifies them of an impending or potential audit.”
