Are you confused about how crypto gets taxed in South Africa? Maybe you’re not even sure if you should be paying tax on your crypto profits.
Our crypto tax guide provides you with information about the crypto tax rate for 2023, how to pay your crypto taxes, how to calculate it, and how to report your crypto tax to the South African Revenue Service (SARS).
A cryptocurrency is a digital or electronic currency where the exchange of currency values is verified and recorded by a decentralised system through cryptography.
A blockchain is an example of a decentralised system that uses cryptography to verify and record information. A blockchain is a distributed ledger where each ‘block’ (record of a transaction) is securely linked together through cryptographic hashes.
A Crypto asset (formerly called cryptocurrency), as defined by SARS, is a digital representation of ‘value’. People can transfer, trade, and store it electronically to make a payment or as an investment. Cryptography techniques must be the underlying technology used for an asset to be considered a ‘crypto asset’.
Yes. SARS makes it clear that cryptocurrency is subject to tax, despite how limited the guidance may be. Depending on your crypto transactions and the aim of your investment activity, you might have to pay income tax or capital gains tax.
The tax you'll pay on cryptocurrency in South Africa is determined by the type of transaction, your income, and the tax that applies.
For crypto income subject to capital gains tax, people pay an effective 18% tax rate at most on gains exceeding the R40 000 yearly exclusion based on their overall taxable income.
People pay between 18% and 45% in tax on cryptocurrency profits subject to income tax, based on their total taxable revenue. These mainly consist of short-term profits.
The sale of a crypto asset that results in proceeds greater than the base cost is considered a capital gain. But there is no guidance on how exactly cryptocurrency transactions will be classified as capital gains transactions.
Looking at other asset classes (like, equity shares) can give us a precedent on how capital gains tax treatment applies. When a share is held as a capital asset (a long-term asset that produces dividends) capital gains apply. In contrast, when a share is held for trading (selling the share for a profit), revenue from the trade would be considered income under regular income tax.
If you’re wondering how much tax you’ll owe for this coming financial year for crypto assets not considered a capital gain, SARS provides an income tax rate table for the 2024 tax year. This will run from 1 March 2023 to 29 February 2024. Here’s a look at the tax rates for 2024:
| Taxable Income (R) | Tax Liability (R) |
|---|---|
| 1 – 237 100 | 18% of taxable income |
| 237 101 – 370 500 | 42 678 + 26% of taxable income over 237 100 |
| 370 501 – 512 800 | 77 362 + 31% of taxable income over 370 500 |
| 512 801 – 673 000 | 121 475 + 36% of taxable income over 512 800 |
| 673 001 – 857 900 | 179 147 + 39% of taxable income over 673 000 |
| 857 901 – 1 817 000 | 251 258 + 41% of taxable income over 857 900 |
| 1 817 001 and above | 644 489 + 45% of taxable income over 1 817 000 |
It's clear that your total annual income determines the rate of tax you'll owe on crypto investments that are seen as revenue.
If you’re an investor and dispose of a crypto asset considered a capital asset, your income from the transaction will be taxed on capital gains. There are several ways to sell a crypto asset. However, the most straightforward is whenever the ownership of a crypto asset changes. Here’s a list of alternative routes:
As a result, if you dispose of a capital asset as an investor through any of the methods mentioned and you earn from the sale, you will need to pay capital gains tax.
For taxpayers who are natural persons, the tax rate on capital gains in South Africa is 18% for individuals and special trusts, which you'll pay on one of your gains. The capital gains tax rate for companies is 21.6%, and for ‘other trusts’, it is 36%. Please note these are the rate as of writing (March 2023) and are subject to change.
Capital gains or losses may occur from transactions where a crypto asset is traded for ZAR, another fiat currency, or another cryptocurrency.
To calculate your capital gains or losses, you must ascertain the selling price of the goods or services (cost basis) and the purchase price (proceeds) of the cryptocurrency that was sold.
Simply put, the selling price is the value (in Rands) of the cryptocurrency sold at the point of the transaction. In contrast, the purchase price is determined using the First-in-First-out (FIFO) accounting principle.
If you have purchased the same cryptocurrency asset more than once, the FIFO approach is used to sell the coins you first acquired. SARS also makes it clear that any directly related expenses, like trading fees, may be claimed when working out your profits and losses.
You can use the following formula to calculate capital gains:
capital gains = selling price – purchase price
Here’s an example of how to calculate your capital gains from crypto trades so that you can gain a better understanding of how this works.
Let’s say Robyn bought 0.2 Bitcoin (BTC) for R125,000 in December 2021. In February 2022, two months later, she purchased 0.3 BTC for R170,000. Robyn now owns 0.5 BTC, which she bought for R295,000 in total.
Robyn decided to sell 0.4 BTC in March 2022 and maintain 0.1 Bitcoin as a long-term investment. In exchange for her sale of 0.4 Bitcoin, she earns R340,000.
This is what her transactions will look like:
| Type | Date | Amount | Price | Cost Basis | Profit/Loss |
|---|---|---|---|---|---|
| Buy | 2021-12-10 | 0.2 BTC | R125,000 | R125,000 | |
| Buy | 2022-02-08 | 0.3 BTC | R170,000 | R170,000 | |
| Sell | 2022-03-15 | 0.4 BTC | R340,000 | (?) | (?) |
Robyn must now determine the purchase price of the 0.4 BTC that was sold by using the FIFO method, which is calculated as follows: R125,000 + (0.2 / 0.3) * R170,000 = R238,333.
Knowing that the sales price was R340,000 allows us to easily calculate the capital gains: R340,000 - R238,333 = R101,667.
This is what the result would be:
| Type | Date | Amount | Price | Cost Basis | Profit/Loss |
|---|---|---|---|---|---|
| Buy | 2021-12-10 | 0.2 BTC | R125,000 | R125,000 | |
| Buy | 2022-02-08 | 0.3 BTC | R170,000 | R170,000 | |
| Sell | 2022-03-15 | 0.4 BTC | R340,000 | R238,333 | R101,667 |
As a result, Robyn must include the R101,667 gain in her 2022 tax return, which she will submit in 2023.
If you found this crypto tax South Africa guide helpful, QuickBooks provides a wide range of tax-related resources. This includes information about 2024 tax brackets, tax tables, tax tips for small business owners and South African tax laws. We also provide accounting software to help you stay on top of your finances.
Disclaimer: This page is provided for general information purposes only and does not constitute accounting, tax, business, or legal advice. You should always consult your own advisors for advice relating to your business or situation. Always consult SARS directly as information changes from time to time.
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