SARS Outlines Stance on Cryptocurrencies

South African Revenue Service

Taxpayers will be expected to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued.

The South African Revenue Service (SARS) announced this in a statement outlining its stance on how cryptocurrencies are to be taxed.

SARS also declared that normal income tax rules will continue to be applied to cryptocurrencies.

According to SARS, “Cryptocurrency (typified by Bitcoin) is an internet-based digital currency that exists almost wholly in the virtual realm.”

SARS regards cryptocurrencies as assets of an intangible nature and not as currency for income tax purposes or Capital Gains Tax.

Income received from cryptocurrency transactions can be taxed on revenue account under “gross income” or be regarded as capital in nature.

In a separate matter, SARS has announced an amendment to Schedule 1 of the Customs and Excise Act.

The amendment, published in Government Gazette 41564, deals with the rate of duty on seed and brown wheaten meal.

Meanwhile, at the end of last week, national treasury issued a statement confirming the launch of the twin peaks system of financial regulation.

The twin peaks model establishes two financial sector regulatory authorities - the Prudential Authority and the Financial Sector Conduct Authority.

At the launch, the finance minister, Nhlanhla Nene, described twin peaks as a “dynamic, innovative and smart system. It aims to streamline our approach to financial regulation, to clearly define roles and responsibilities, and to create flexibility.”

As regards the increase in VAT, the standing committee on finance has called for comment on the Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill.

The draft bill seeks to:

•    fix the rates of normal tax;
•    amend the Estate Duty Act, 1955, so as to amend the rate of estate duty;
•    to amend the Income Tax Act, 1962, so as to amend rates of tax and monetary amounts;
•    amend the Customs and Excise Act, 1964, so as to amend rates of duty in Schedule 1 to that Act;
•    amend the Value-Added Tax Act, 1991, so as to amend the rate of the Value-Added Tax;
•    amend a provision so as to provide for more efficient taxation of electronic commerce; and
•    provide for matters connected therewith.

Comment is invited until 20 April 2018.

Hearings in parliament are scheduled for 25 April and 2 May 2018.

Sabinet Cape Town Office