South African Crypto Tax Overview
A quick overview of crypto tax rules in South Africa
Wed Jul 06 2022
Thanks to Crypto Tax Consulting for contributing this post!
South African crypto-tax regulations can be tricky to those unfamiliar with the lay of the land, however, we have noted a few of these key rules, broken down into digestible pieces. These rules apply if you've been involved with simple trading of Bitcoin, Ethereum or stable coins like USDT or USDC, or if you've been doing more complex on-chain activity like Staking, Liquidity Pooling or loans.
What are the rules?
Crypto activities (like trading, swaps, liquidity pooling and staking) generate taxable events and therefore profit/gains. In South Africa, these will either be "capital" or "revenue" (personal income) in nature.
How do I know the difference?
Great question! There appears to be a lack of concrete guidance from SARS on firm qualifications for each classification – as each taxpayer’s circumstances will be different, the classification is usually done on a case-by-case basis, and it is important to think carefully about which way this might fall.
Here's a little guidance on how to decide:
If you've been actively trading throughout the year, involved with on-chain activities which generate lots of taxable events or have been swapping between lots of different assets then your activity is probably revenue in nature. Individuals in this situation will be taxed at their nominal tax rate.
If your transactions are infrequent, often when an asset is held for a long period of time, then your activity is probably capital in nature. In this case, your trades will be taxed in this way.
It's always best to check with a tax professional to make sure you get this right as there's no room for error! If you need a hand, Recap works closely with specialist crypto tax advisors Crypto Tax Consulting who can help you make a decision about how to report.
If you want to know more, check out our comprehensive crpyto tax guide for South Africa. Recap's platform allows you to connect all of your crypto accounts, check your transactions and see your tax posisiton. Our end-to-end encrypted system means we never see your trading history or exchanges. It's free to check your taxes so why not get started now?