How does tax and regulation affect South Africans?

Over the past few years, as cryptocurrencies have gained increased traction and become increasingly mainstream, financial authorities have begun looking to bring these assets into the regulatory framework. We have seen some countries move swiftly with regulation and others, like El Salvador, even adopting Bitcoin as legal tender. Rishi Sunak, the former Chancellor of the Exchequer in the UK, was recently quoted as saying, “Cryptoassets can provide exciting new opportunities, offering people new ways to transact and invest, but it’s important that consumers are not being sold products with misleading claims. We are  ensuring consumers are protected, while also supporting the innovation of the crypto asset market.” 

Kuben Naidoo, Deputy Governor of the South African Reserve Bank confirmed that regulations are set to be implemented within the next 12 to 18 months. A country that has a progressive regulatory framework pertaining to cryptocurrency can expect to see increasing capital flows into the country as investors take comfort that their assets are protected. Additionally, a regulated crypto industry could increase overall adoption as investors become more knowledgeable and organisations broaden their investment spectrum. American company Fidelity Investments has announced that it would provide an option to include Bitcoin (BTC) in its 401(k) US retirement investment plan. This is just the tip of the iceberg of what could be possible with regulation, and South Africa could soon follow suit giving investors the option of having crypto form part of mutual funds.

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What about tax?

Regulation and tax go hand in hand, and with us entering tax season, many investors are starting to question how SARS will tax your crypto. SARS doesn’t regard cryptocurrency as a currency but rather as an intangible asset. So all crypto transactions will be taxed according to the existing South African tax laws. This means that crypto gains will be taxed based on capital gains tax principles or as revenue transactions (i.e. as ordinary income, like your salary). This will depend on your situation and intention to purchase crypto in the first place.‍

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Where does this leave Altify customers?

Altify has partnered with Tax Consulting South Africa (TCSA) and launched Altify Tax - a solution enabling you to easily become crypto tax compliant without all the stresses of calculating your gains across loads of different exchanges and wallets. TCSA are a leading provider of tax consulting, consultation and compliance; they equip South African taxpayers with the correct advice when dealing with their crypto asset-related tax queries.  TCSA is at the forefront of regulatory tax compliance and is a leading voice in the tax regulatory and compliance space. 

Altify and non-Altify customers can access Altify Tax for the tax filing season via an easy online portal.  The purpose of this service is to provide you with better clarity regarding the tax treatment of your crypto-asset holdings by combining your transaction history and performing all the heavy lifting when it comes to calculating your taxes. With the support of over 300 exchanges and 10,000+ cryptocurrencies, Altify Tax provides you with everything you need to remain tax compliant.

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Where can you learn more?

On the 2nd of August 2022, Altify and TCSA will host a webinar to discuss the current tax and regulatory environment in South Africa and some of Altify's exciting product offerings. Register and sign up here to save your seat!