Keep this in mind when submitting crypto tax returns

  • Luno has highlighted some important points for those in SA concerned about crypto tax.
  • The deadline for individual tax returns due to SARS is 23rd October.
  • Christo de Wit, Luno’s country manager, shares his insights in particular.

For those who dabble or invest in cryptocurrency in South Africa, later this month is rather important when it comes to tax. This as the deadline for individual tax returns due to the South African Revenue Service (SARS) is 23rd October, which has significant implications when it comes to crypto tax.

With that in mind, local outfit Luno has shared some advise when it comes to crypto tax.

Starting with what taxes need to be paid on crypto, Luno notes that this largely depends on the nature of your “interactions” with crypto.

“To determine tax treatment, the South African Revenue Service (SARS) considers the type of activity, as well as your intentions and length of investment. How you complete your tax return will depend on whether your activity deems you a trader or an investor,” the crypto exchange platform explains in a press release sent to Hypertext.

“Traders are viewed as short-term investors, looking to actively trade in the market for a profit. Crypto asset traders will generally frequently trade tokens and engage in a lot of swing trading, or dispose of crypto when opportunities arise to make a profit. Crypto asset investors are generally seen as longer-term holders of tokens with the expectation of long-term growth,” it unpacks.

Following on from this, the amount you are taxed will depend on whether SARS views your activities as a trader or investor. “Traders are taxed on their entire crypto profits (deducting any allowable expenses), at their normal income tax rate. Investors will be taxed on 40% of capital gains less the annual allowance of R40,000, at their normal income tax rate,” Luno uses as an example.

The exchange platform is also important to point out that crypto tax only applies to assets that are withdrawn, but this is a common misconception, especially here in SA. On this front it says SARS considers any gains on crypto assets to be taxable, whether it’s capital or revenue in nature. This applies even if the funds are not readily in your account and remain on an exchange or platform like Luno.

“Even trading one crypto asset for another is taxable, which means you must declare all your trades where it applies,” it adds.

The final element that Luno highlights is the admin that crypto tax payers must take before filing. Here the exchange platform points to a freely accessible crypto tax calculator called Recap. Luno also has the ability to download statements for each tax period, to assist with manually calculating.

“You’ll need detailed records of all of your trades and accurate and consistent pricing for each asset to calculate your taxable gains or income,” the platform concludes.

[Image – Photo by Jon Tyson on Unsplash]


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