For months, SARS has been clear about its plan to clamp down on crypto investors. While many may be under the impression that crypto is going under the radar, SARS is firmly taking the position that it is not.
With luxury audits being the order of the day, SARS is continuously looking into those who live luxurious lifestyles, particular those who own luxury cars and crypto assets, without declaring their income to the revenue service.
In many cases, this income pertains to the profits made from crypto assets.
According to SARS, crypto assets are defined as financial instruments and while the investment and trading of crypto might not be illegal in South Africa, there are additional steps that crypto traders need to take into account when filing their taxes.
Crypto holdings, regardless of gains and losses, need to be declared. We have seen SARS enforce compliance by charging tax penalties up to 100% following an audit.
Many taxpayers struggle to apply the correct tax treatment and disclosure of their crypto transactions. It has been suggested that crypto service providers may issue tax certificates in the near future, for regulatory purposes.