How your crypto assets are taxed

That’s according to Christo de Wit, South African country manager of Luno, a licensed financial services provider.

• Blockchain transactions are not anonymous. For example, one common misconception is that blockchain transactions are entirely anonymous and it is possible to evade tax obligations. Wiehann Olivier, partner at Forvis Mazars and fintech and digital asset lead at Forvis Mazars South Africa, explains that most blockchains are public ledger, meaning all transactions are visible and immutable, so they cannot be deleted. “SARS may engage with exchanges and request transactional data, as well as data-matching techniques to trace transactions back to taxpayers and they can go back further than five years. Crypto asset providers are regulated in South Africa and are therefore obligated to provide information requested by regulatory tax authorities, though this does not mean that SARS has open access to your crypto-related assets and transactions,” he says;


• Any crypto disposal is a taxable event. It is a popular misconception that you only trigger a tax obligation when you convert your crypto to a fiat currency such as the South African rand. However, SARS considers any crypto disposal – including trading one crypto for another or using it to buy goods and services – as a taxable event. Depending on the nature of the transaction, it could be subject to either capital gains tax (CGT) or income tax; and


• Trading versus investing. Dale Russel, director of TrustReserve Solutions and Moore Blockchain and Digital Assets JHB, says that a significant distinction needs to be made between trading and investing in crypto. “Traders or individuals who frequently buy and sell crypto for short-term gains are taxed on their profits as regular income. In contrast, investors holding crypto for long-term appreciation are subject to capital gains tax, which is lower but only applies to 40% of the gain, less an annual exemption of R40,000,” he says.

• Proper record-keeping is crucial. SARS requires detailed records of transactions, including acquisition and disposal dates, amounts and transaction types. Information must be kept for at least five years. These records are essential for accurate tax reporting, and failure to maintain them can lead to discrepancies during tax assessments;


• Mining, staking and airdrops have tax implications. Any crypto earned in these ways is considered income at the time of receipt and is taxed accordingly, based on its fair market value in ZAR. Later disposals may lead to additional tax liabilities if the asset’s value changes. While capital losses could be offset, you could land in hot water if this is incorrectly applied. You need to be tactical about your approach to tax and should seek specialist advice.