The tax authority of South Africa has warned taxpayers in the country against think ofing to report all their cryptocurrency transactions. However, it also presented a framework with a few definite points for those trading cryptocurrencies such as the ability to claim expenses and impoverishments.
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Not Legal Tender, Still Taxable
The South African Receipts Service (SARS) announced on Friday that it expects everyone to proclaim cryptocurrency gains as part of their taxable income. “The onus is on taxpayers to submit all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Crash to do so could result in interest and penalties.”
The SARS acknowledged that it skinned many calls from the public to provide direction on how to treat cryptocurrency tax check up oning but says that a separate interpenetration is unnecessary for now. Instead it tried to account for how it falls under the current framework. Anyone who is uncertain about discrete to transactions involving cryptocurrencies may also seek guidance from the intermediation.
The Existing Tax Framework
The agency explains that cryptocurrencies are not regarded by SARS as a currency for proceeds tax purposes or Capital Gains Tax, rather they are regarded as “assets of an airy nature.” And, that “Whilst not constituting cash,” income received or accrued from cryptocurrency bargain proceedings can be taxed on revenue account under “gross income”. When high-mindedness or services are exchanged for cryptocurrencies, transactions are regarded as a barter.
On the positive side, South African taxpayers are also fitted to claim expenses associated with cryptocurrency accruals, “provided such cost is incurred in the production of the taxpayer’s income and for purposes of trade.” Additionally, SARS thinks fitting not require VAT (Value-Added Tax) registration as a vendor for purposes of the supply of cryptocurrencies in 2018.
While SARS now divulges the onus is on taxpayers to report cryptocurrency transactions, traders should not undertake it is not looking for other way to find out about them. Back in December 2017 we pieced that SARS was exploring ways to track and tax bitcoin trading. The mechanism held talks with tech companies offering to implement proceeding tracking solutions for it.
Is it fair for the SARS to demand income tax payments on cryptocurrencies while not recalling them as legal tender? Share your thoughts in the comments section beneath.
Images courtesy of Shutterstock.
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