Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Samsung’s bet on folding phones faces major test

      10 July 2025

      OpenAI to launch web browser in direct challenge to Google Chrome

      10 July 2025

      The satellite broadband operators taking on Starlink

      9 July 2025

      Yaccarino out: Musk’s handpicked CEO quits X suddenly

      9 July 2025

      AI gold rush propels Nvidia to record $4-trillion market cap

      9 July 2025
    • World

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025

      Grammarly acquires e-mail start-up Superhuman

      1 July 2025

      Apple considers ditching its own AI in Siri overhaul

      1 July 2025

      Jony Ive’s first AI gadget could be … a pen

      30 June 2025

      Bumper orders for Xiaomi’s YU7 SUV heighten threat to Tesla

      27 June 2025
    • In-depth

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025
    • TCS

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025

      TCS+ | First Distribution on the latest and greatest cloud technologies

      27 June 2025

      TCS+ | First Distribution on data governance in hybrid cloud environments

      27 June 2025
    • Opinion

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Cryptocurrencies » Sars should give crypto investors more carrot, less stick

    Sars should give crypto investors more carrot, less stick

    By Tertius Troost9 June 2021
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    It’s been more than three years since the South African Revenue Service’s media statement on cryptocurrencies. In that statement, Sars said it would apply “normal income tax rules” to cryptocurrencies when assessing whether a gain is revenue or capital in nature, and that crypto assets are not seen as currency for income tax purposes.

    Any further guidance from Sars has been scarce. Crypto traders, especially those that have no financial or tax background, often turn to fellow traders on social media platforms for advice (not advisable). Based on my interaction with cryptocurrency holders, uncertainty remains with many being surprised when I explain the so-called “normal rules”, which become pretty complicated as the crypto market continues to develop.

    Sars commissioner Edward Kieswetter has been quick to state that the agency will crack down on non-compliant taxpayers who do not declare their crypto asset profits. However, many of these taxpayers do not even know that they are non-compliant. So, why not provide more guidance to assist them in declaring their crypto asset profits? The only guidance to date is the previously mentioned media statement along with 15 FAQs, or frequently asked questions, on cryptocurrencies hidden away on the Sars website.

    Many taxpayers do not even know that they are non-compliant. So, why not provide more guidance to assist them…?

    Anecdotally, it seems that Sars still views crypto assets as highly speculative intangible assets. However, exponential change is taking place in this industry – and certainly since the initial media statement on 6 April 2018. Cryptocurrencies have provided us with various initiatives and businesses that are shaping this alternative financial system. These initiatives include cryptocurrency arbitrage, investments into predefined cryptocurrency bundles, lending and borrowing through the use of decentralised finance (DeFi), staking and mining rewards for solo or pooled staking, and mining.

    Capital in nature

    At a minimum, Sars — together with national treasury — states that gains (and losses) on crypto assets are deemed to be capital in nature if held for a period of more than one year (similar to section 9C, which provides equity shares to be deemed to be capital in nature after three years). In this way, Sars can at least assist taxpayers in having certainty in their disclosures. It also assists in bringing taxpayers to Sars, instead of Sars needing to try and find non-compliant taxpayers in a space they are ill-equipped to conquer.

    With all tax collection methods, the cost of the collection must be weighed up against the actual amount that can be collected. Providing this form of incentive will encourage taxpayers to disclose their positions and save Sars the cost of finding extremely expensive methods of obtaining this information from markets.

    For true transparency, Sars should attempt to detail as much of the current crypto transactions they are aware of in an interpretation note. Touching on aspects like the interaction between crypto assets and section 24J (interest), whether crypto-to-crypto conversions qualify as disposals (in my opinion they do), the rebalancing of crypto bundle investment and whether these should fall within the ambit of a collective scheme of investments, staking rewards that could be argued as being interest, and the tax implication of collateralised lending through DeFi.

    The author, Tertius Troost, argues that Sars should be doing more to assist taxpayers with compliance around cryptocurrencies

    In the meantime, if taxpayers have not declared crypto asset profits, it remains advisable to follow the voluntary disclosure programme provided by Sars. Failing to disclose any relevant amounts could result in substantial penalties and/or harsh criminal sanctions.

    As highlighted by my colleague Wiehann Olivier, digital asset leader at Mazars in South Africa, crypto assets were originally designed to facilitate peer-to-peer transactions across the Internet. This meant that there was no need for any intermediary or monetary regulations, which led people to believe that crypto assets should operate independently from any form of regulation. However, they fail to realise that certain regulations are, in fact, imposed to protect consumers and economic stability.

    • Tertius Troost is tax manager at Mazars in South Africa


    Bitcoin Edward Kieswetter Mazars Sars South African Revenue Service Tertius Troost top
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleLoad shedding escalated to stage 4
    Next Article Anatomy of a bitcoin scam: How MTI duped investors

    Related Posts

    Burning millions on the blockchain: how hackers used bitcoin to send a message

    30 June 2025

    Crypto shakeout: bitcoin soars, altcoins crater

    30 June 2025

    Sars turning to AI to collect more tax

    25 June 2025
    Company News

    Samsung unfolds the future with thinnest, lightest Galaxy Z Fold yet

    9 July 2025

    Huawei supercharges South African SMEs with over 20 new eKit products

    9 July 2025

    Webtonic cracks the talent code with AWS-powered TonicHub

    9 July 2025
    Opinion

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.