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Treasury includes cryptocurrency in draft tax legislation
- 19 December 2019
- Individuals Tax
- Cliffe Dekker Hofmeyr
Wednesday, 01 August 2018
Important:
This article is based on tax law for the tax year ending 28 February 2019.
Author: Cliffe Dekker Hofmeyr
On 16 July 2018, National Treasury’s draft Taxation Laws Amendment Bill (draft TLAB) was published for public comment. The draft TLAB has encapsulated a first for South African taxpayers by introducing legislative provisions for cryptocurrency in the proposed amendments.
Taxation of cryptocurrency prior to the draft TLAB
The South African Revenue Service (SARS) announced on 6 April 2018 that normal tax rules would apply to cryptocurrency in South Africa. As noted in our Tax and Exchange Control Alert of 20 April 2018 in this respect, despite the continued popularity of cryptocurrency trade, South African legislation has, until the 2018 draft TLAB, been silent on the taxation and regulation of cryptocurrency.
In their operations within the cryptocurrency sphere, taxpayers have thus far simply been required to declare any cryptocurrency gains or losses as part of their taxable income. Moreover, in accordance with SARS’s April announcement, in order to determine whether cryptocurrency and cryptocurrency transactions are of a capital or revenue nature, the taxpayer’s intention when acquiring the cryptocurrency would be considered. For example, if the taxpayer obtained cryptocurrency so as to pursue profit-making, the cryptocurrency would be considered trading stock and any transactions would be of a revenue nature. This test is applied to the facts and circumstances of each individual case.
Please click here to read more.
This article first appeared on cliffedekkerhofmeyr.com.