Reports this morning suggest that South Africa’s Revenue Service (SARS) are the next government group to weigh in on cryptocurrency taxation as the current tax year comes to a conclusion.
According to Fin24, SARS have said:
“The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties, taxpayers who are uncertain about specific transactions involving cryptocurrencies may seek guidance from the agency.”
This comes in the wake of similar statements from other international bodies. Overall, I think this was expected by many since 2017 – 2018 did see worldwide cryptocurrency investing sky rocket, with currency values seemingly out of control, some people did indeed make a lot of money, money which has otherwise often gone unaccounted for.
SARS are expecting both VAT and general income tax to be made payable by those who have cryptocurrency assets within South Africa. The statement, does not directly mention any criminal proceedings being taken out against those who fail to declare their cryptocurrency assets however it does mention ‘interest’ and ‘penalties’.
The full nature of any disciplinary action is yet to be discussed.
The anonymous nature of cryptocurrencies does make policing these new taxation regulations rather tricky, not just in South Africa but generally internationally to. Relying on people’s honesty to report and pay their taxes is an infantile system. Let’s face it, we would all experience a very different financial climate if we didn’t have our income tax automatically deducted (in some cases) from our wages. Moreover, if we had to calculate and declare VAT on our everyday purchases, how many of us would actually do it? At an estimated guess, I don’t think many people would.
This, compliments my major fears about these new taxation guidelines, it simply makes an already perplexing process even more difficult to grasp. Getting your hands on cryptocurrencies is no easy feat, now having to declare your taxes simply adds to the complexity of the situation. Of course, many people will see this as but a mere inconvenience but overall, people are scared of this technology, does taxation make it even scarier?#
Not only that of course but as we know the nature of cryptocurrency is that it can avoid such taxes and regulations, as its a private trading opportunity, should it be subject to tax and VAT? If you trade items with a friend, you don’t them chop a portion of those items up to send to the local council do you?
It’s a grey area, it’s difficult but its happening. I expect more headlines like this to reach us very soon through the conclusion of this tax year, going into the next.
Featured Image Source: Flickr – Great Photo By Flowcomm