The South African Revenue Service (SARS) outlines crypto income tax reporting rules, adding that cryptocurrency earnings can be treated under the “normal income tax rules.”
10 April, AtoZForex – South African tax agency has stated that citizens can declare cryptocurrency-related income under the normal rules. The South African Revenue Service (SARS) has made its position clear in the latest statement on the tax treatment of cryptocurrencies.
South African Tax Agency Outlines Crypto Income Tax Reporting Rules
Specifically, the SARS has explained that taxpayers who have traded, received, or mined digital currencies will need to report gains or losses to the government. The authorities stated that cryptocurrency earnings can be treated under the “normal income tax rules.”
According to the officials, the crypto earnings might also be subject to the capital gains tax (CGT). The revenue service has outlined:
“There is an existing tax framework that can guide SARS and affected taxpayers on the tax implications of cryptocurrencies, making a separate Interpretation Note unnecessary for now.”
SARS has also added that 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.” SARS further continued:
“Whilst not constituting cash, cryptocurrencies can be valued to ascertain an amount received or accrued as envisaged in the definition of “gross income” in the Act. Following normal income tax rules, income received or accrued from cryptocurrency transactions can be taxed on revenue account under “gross income”.”
Cryptocurrency is an intangible asset
Nevertheless, losses related to cryptocurrency accruals or receipts might be deductible during the tax reporting procedure. This will be applicable under particular conditions. The note from the SARS emerged as a result of the agency spotting the heightened levels of interest and speculation in the cryptocurrency market.
The increased popularity of the cryptos has also led to the investigation into the tax implications in the sector. As a result, the SARS has classified cryptocurrency as an “intangible asset” for income tax or CGT purposes.
In addition, the agency has stated that it presently does not apply value added tax (VAT) in cryptocurrency sales. The authority has promised to clarify the situation back in February 2018.
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