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SARS releases media statement on the tax treatment of cryptocurrency transactions

Monday, 09 April 2018   (0 Comments)
Posted by: Authors: Robert Gad and Jo-Paula Roman
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Authors: Robert Gad and Jo-Paula Roman (ENSafrica)

On 6 April 2018, the South African Revenue Service (“SARS”), released a media statement regarding its views on the tax treatment of transactions involving cryptocurrencies in terms of the provisions of the Income Tax Act,1962 and Value-Added Tax (“VAT”) Act, 1991. 

A high-level overview of the views taken in the media statement are as follows:

  • taxpayers are required to declare all income related to cryptocurrency transactions.
  • SARS regards cryptocurrencies as intangible assets (expressly not currency), constituting neither official South African tender nor widely used and accepted in South Africa as a medium of payment or exchange.
  • cryptocurrency received or accrued through the mining of same will be held as trading stock (ie, held on revenue account until the newly acquired cryptocurrency is sold for cash or exchanged).
  • in other cases, the determination of whether an amount received or accrued is revenue or capital nature will follow established tax principles contained in existing case law.

Please click here to read more.

 

This article first appeared on ensafrica.com.


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