Declaring tax on Crypto income?

[M@tree2]

Hey all, just a few questions on doing crypto the legal way, don't feel like starting out life with a tax dodger record...

Some basic facts about this question:
Student, unemployed and studying full time at an accredited tertiary institution.
The only income I receive is from an "allowance", not from any job or work.

Currently, for this year, I stand to make roughly R40k(net) from Crypto at current exchange rates, not including the costs of electricity.

Do I understand correctly that there is an annual exemption of R40000 from the Capital gains tax, or is crypto declared as an income?
This is where my understanding gets a bit hazy, as I do withdraw my crypto, but I only withdraw roughly R1000 a month to be placed into a savings account.
Now from what I understand or my lack thereof, is this withdrawal would be treated as an income stream, and thus be liable to the standard 18% income tax rate between R1 and R226000?
The other currency either gets traded into other tokens such as ETH and then held, would I incur taxation on the trade as well?

I apologize if this has been answered somewhere, just the guidelines aren't great on this...

Some advice would be appreciated
Thanks

 

[virus786]

Rates of Tax for Individuals | South African Revenue Service

On this page you will see Individuals’ tax table, as well as the Tax Rebates and Tax Thresholds – scroll down. To see tax rates from 2014/5, see the Archive – Tax Rates webpage. 2025 tax year (1 March 2024 – 28 February 2025) 21 February 2024 – No changes from last year 2024 tax […]

www.sars.gov.za

Refer to Tax Thresholds

 

[Confucius]

@Dom

 

[Smurf]

Hey all, just a few questions on doing crypto the legal way, don't feel like starting out life with a tax dodger record...

Some basic facts about this question:
Student, unemployed and studying full time at an accredited tertiary institution.
The only income I receive is from an "allowance", not from any job or work.

Currently, for this year, I stand to make roughly R40k(net) from Crypto at current exchange rates, not including the costs of electricity.

Do I understand correctly that there is an annual exemption of R40000 from the Capital gains tax, or is crypto declared as an income?
This is where my understanding gets a bit hazy, as I do withdraw my crypto, but I only withdraw roughly R1000 a month to be placed into a savings account.
Now from what I understand or my lack thereof, is this withdrawal would be treated as an income stream, and thus be liable to the standard 18% income tax rate between R1 and R226000?
The other currency either gets traded into other tokens such as ETH and then held, would I incur taxation on the trade as well?

I apologize if this has been answered somewhere, just the guidelines aren't great on this...

Some advice would be appreciated
Thanks

So let's make a example how capital gains tax works.

Its your proceeds less you base cost.
So if your initial investment amount was R100 that's base. Your gain let's say is R200. R200(proceeds) less R100 base cost = R100 capital gain.

In your case the addition income your receive will be taxed in the tax bracket you fall not sure what your salary is but let's assume the 18% if your main source of income is below 226k.

But from what I can relate to here your annual exemption will apply and you won't be taxed on the gains on your crypto

 

[goldfritter]

Hey all, just a few questions on doing crypto the legal way, don't feel like starting out life with a tax dodger record...

The best way to do this is to talk to a professional tax accountant. It will cost you a few hundred rand for a consultation - i.e. a small fraction of what you've earned. It's totally worth it.

Remember, advice-givers on the internet might not be able to take everything into account (if you'll forgive the pun).

 

[Dom]

Hey all, just a few questions on doing crypto the legal way, don't feel like starting out life with a tax dodger record...

Some basic facts about this question:
Student, unemployed and studying full time at an accredited tertiary institution.
The only income I receive is from an "allowance", not from any job or work.

Currently, for this year, I stand to make roughly R40k(net) from Crypto at current exchange rates, not including the costs of electricity.

Do I understand correctly that there is an annual exemption of R40000 from the Capital gains tax, or is crypto declared as an income?
This is where my understanding gets a bit hazy, as I do withdraw my crypto, but I only withdraw roughly R1000 a month to be placed into a savings account.
Now from what I understand or my lack thereof, is this withdrawal would be treated as an income stream, and thus be liable to the standard 18% income tax rate between R1 and R226000?
The other currency either gets traded into other tokens such as ETH and then held, would I incur taxation on the trade as well?

I apologize if this has been answered somewhere, just the guidelines aren't great on this...

Some advice would be appreciated
Thanks

Keep a track of it as at 28 Feb 2022 - declare it when you do your tax return in July (assuming you have a tax number).

Play it safe - more info than less (avoidance is a funny joke whereas evasion is a joke you tell in the prison shower).

 

[Dom]

The best way to do this is to talk to a professional tax accountant. It will cost you a few hundred rand for a consultation - i.e. a small fraction of what you've earned. It's totally worth it.

Remember, advice-givers on the internet might not be able to take everything into account (if you'll forgive the pun).

A few hundred an hour (normally at least 3).

 

[Dom]

So let's make a example how capital gains tax works.

Its your proceeds less you base cost.
So if your initial investment amount was R100 that's base. Your gain let's say is R200. R200(proceeds) less R100 base cost = R100 capital gain.

In your case the addition income your receive will be taxed in the tax bracket you fall not sure what your salary is but let's assume the 18% if your main source of income is below 226k.

But from what I can relate to here your annual exemption will apply and you won't be taxed on the gains on your crypto

Afraid not, crypto must be declared separately.

 

[ThatGuyJD]

Guys it's not a capital gain ffs. Who's spreading that kaka?

It's an income. declare as part of income, you don't make anything else so unless you've made more than like 80K for the year then your primary rebate is going to cover the income.

Normal trading isn't an capital gain either so if it were speculation or mining it'll end up as part of income.

 

[ThatGuyJD]

Keep a track of it as at 28 Feb 2022 - declare it when you do your tax return in July (assuming you have a tax number).

If you don't have a tax number it's pretty painless to apply for one as well.

Play it safe - more info than less (avoidance is a funny joke whereas evasion is a joke you tell in the prison shower).

Nice, will try to remember that one.

 

[Smurf]

Guys it's not a capital gain ffs. Who's spreading that kaka?

It's an income. declare as part of income, you don't make anything else so unless you've made more than like 80K for the year then your primary rebate is going to cover the income.

Normal trading isn't an capital gain either so if it were speculation or mining it'll end up as part of income.

Thanks for clearing that up I was also under the assumption it was CGT.

 

[ThatGuyJD]

Thanks for clearing that up I was also under the assumption it was CGT.

There's a way to make it CGT but needs to be held for longer than 3 years and then sold. Or must be income of a capital nature as defined in the income tax act.


@M@tree2 A good tax practitioner might even be able to help you argue for expenses to claim those as a deduction if you can provide support. So assuming that you're a miner it would be mostly electricity but also opens you up to possibly having to register as a provisional taxpayer if you exceed the tax threshold.
There might even be some additional stuff to claim in regards to wear and tear although not quite sure off the top of my head what you'd need to be able to provide/adhere to claim that type of stuff.

 

[Smurf]

There's a way to make it CGT but needs to be held for longer than 3 years and then sold. Or must be income of a capital nature as defined in the income tax act.


@M@tree2 A good tax practitioner might even be able to help you argue for expenses to claim those as a deduction if you can provide support. So assuming that you're a miner it would be mostly electricity but also opens you up to possibly having to register as a provisional taxpayer if you exceed the tax threshold.
There might even be some additional stuff to claim in regards to wear and tear although not quite sure off the top of my head what you'd need to be able to provide/adhere to claim that type of stuff.

That was my understanding you keep it for capital in nature and not revenue hence you fall under CGT. But it makes sense that is seen as normal income if you trade with it on regular basis.

Wonder if you do claim expenses they are certainly going to make you proof that ie majority of the power bill was used for mining which we all know SARS will dissalow such a expense to a margin of percentage they feel fit

 

[ThatGuyJD]

That was my understanding you keep it for capital in nature and not revenue hence you fall under CGT. But it makes sense that is seen as normal income if you trade with it on regular basis.

Wonder if you do claim expenses they are certainly going to make you proof that ie majority of the power bill was used for mining which we all know SARS will dissalow such a expense to a margin of percentage they feel fit

Yip, they will either provide an margin of electricity or you'll have to be able to provide sufficient proof to argue against their judgement.

 

[Sanari]

Your tax will be on the price that you received into your wallet as a salary. You can write electricity off as an expense which is why I have a meter to measure how much I use. The equipment can also be written off.

Wear and Tear | TaxTim SA
https://www.sars.gov.za/wp-content/...2-47-Wear-And-Tear-Depreciation-Allowance.pdf

Bear in mind that items less than R7000 can be completely written off in a tax year but individual parts can't. So if you buy a mining rig for less than 7K you can write it off, but for a single GPU you can't.

But it's best to speak to a tax consultant.

Hope that helps

 

[ThatGuyJD]

Update mostly...

Income from mining needs to be declared as such when you are awarded rewards for mining at the value of the award currently.
Then when sold the profit/loss is determined from the difference is current price and award date.

Also refer to deduction for wear and tear here(Carb post). Also the electricity and likely the transaction fees can be claimed as expenses should it be used "in the production of income" (as per the definition) but need to have records (the more detailed the better) should SARS ask for them.

All this boils down to: Pay someone so they can deal with the things for you and give them as much info as they can use to support expenses. Although remember that it's not going to ensure more expenses rather just more accurate reporting. Which might not be in your favour.

 

[TheJudge]

I have no doubt there are tax consultants who will be advertising their services for unwinding crypto earnings. You tend to find consultants with a niche area, for instance there are guys that specialise in disability deductions to help with the process for claim backs etc.

 

[g0nt4du]

So, who are the tax advisors here? 😂 Is @Dom one?

 

[Dom]

So, who are the tax advisors here? 😂 Is @Dom one?

Afraid not

 

[HButton]

PM me if you want the contract details of a tax advisor firm that I will use every year from now on.

Great advise and great service. Not sure I can just post details on the thread.

All @ThatGuyJD said is accurate in my opinion.

 

[superrob]

Um

 

[TheJudge]

Um

Shhhhhhh.... just take the compliment...

 

[ThatGuyJD]

All @superrob said is accurate in my opinion.

Don't see a comment here by him... Weird...

 

[HButton]

Don't see a comment here by him... Weird...

I am also confused, must have been me being weird... updated it to you @ThatGuyJD so that something makes sense on this forum.
I blame the water

 

[HButton]

Um

Sorry @superrob, my bad 😅

 

[ThatGuyJD]

I blame the Vodka

FTFY

 

[HButton]

The two of you complete my triangle of love.

FTFY

 

[Oops!!!]

So, who are the tax advisors here? 😂 Is @Dom one?

he's an everything advisor....much talent!!!