South African tax regulator announced it will continue to apply normal income tax rules to cryptocurrencies, and put onus on taxpayers to declare all cryptocurrency-related taxable income.
The South African Revenue Service (SARS) warned taxpayers of interest and penalties if taxpayers do not declare cryptocurrency gains or losses as part of their taxable income.
"Increased attentiveness and speculation regarding the future of cryptocurrencies has prompted calls for SARS to provide direction as to how cryptocurrencies should be treated for tax purposes," SARS stated.
Taxpayers can claim expenses associated with cryptocurrency accruals or receipts, provided such expenditure is incurred in the production of the taxpayer's income and for purposes of trade.
SARS said guidance can be sought by taxpayers who are uncertain about specific transactions involving cryptocurrencies.
"Cryptocurrencies are neither official South African tender nor widely used and accepted in South Africa as a medium of payment or exchange. As such, cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are regarded by SARS as assets of an intangible nature," the statement added.
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