SARS investigating Bitcoin and Forex traders
The South African Revenue Service (SARS), the scourge of almost every citizen earning a legal salary. Two things in life are sure to get you – death and taxes. However, whereby death is likely only to get you once, tax is going to get you every time. And now it looks the SA taxman has his eyes set on Bitcoin owners and traders, as well as those who partake in forex trading. There’s definitely some cross-pollination when it comes to online trading and Bitcoin, as outside of being purchased or used as an investment, Bitcoin also forms part of the speculative trading options in the world of online trading. Life is full of ironies; when Bitcoin started back in 2009, it and subsequent cryptocurrencies were hailed for their deregulated status and their privacy. Blockchain technology, the process that makes all crypto transactions possible has in recent times been hailed as a true game-changer with multiple applications in the world of business and e-commerce. The point is that what started off as something meant to provide users with a secure and private means of exchange, has now reached the type of commercial level that has prompted governments and banks around the world to implement regulations and with that, tax.
SARS is going with the flow
Even though cryptocurrencies such as Bitcoin does not adhere to the rules or regulations of any central bank and is thus not deemed a currency, it is regarded as an asset for income tax purposes. Therefore, each case will be individually assessed by SARS to determine if capital gains tax or normal tax will apply. SARS is simply toeing the line established by governments across the globe who have all begun to institute tax policies in order to utilise the profits gained from those who are using cryptos like Bitcoin. In terms of forex trading, local traders are likely to be taxed on their earnings, unlike tax-free trading in the UK which is applied to speculative and/or spread betting, although it’s accomplished by way of certain loopholes.
Many are voicing their concerns
There can be no disputing the fact that Bitcoin’s dramatic rise in the last year has garnered the attention of many local buyers and investors. However, investing isn’t a one-size-fits-all scenario. Of the many dissenting voices, the dominating message emerging from the discourse is that the majority of SA citizens who have cryptocurrency accounts are either using cryptos as a sole means of making money or are self-employed and trying to make a decent go at it. The thinking behind the discourse goes on to imply that as Bitcoin remains a high-risk investment, how can individuals be taxed on their investments when it can be lost at any moment, and that SARS should instead focus on major enterprises with large cryptocurrency investments – thus leaving the small fish who are simply trying to make a living.
Business (tax) as usual…
SARS’ decision to tax crypto earnings should come as no surprise, as it’s simply falling in line with what the international community has already been doing for some time now. This comes as bitcoin casinos are now available in South Africa. Currently, South Africa has no dedicated laws or regulations pertaining to cryptocurrencies and thus will apply laws and regulations already in place. You can enrol for a forex trading course in South Africa. Experts in the field of tax have suggested that the best route for SARS would be to implement normal income tax for individuals who have profited from cryptos as opposed to capital gains tax. The reason is that individuals have a capital gains exemption and thus only a portion of the balance can be taxed. In other words, do what you need to do SARS, but don’t upset the apple cart.