Article by: Fourways Accountant: ANNJA LOUCA
The Importance of Disclosing Digital Wallets and Crypto Accounts to SARS
With the growing popularity of cryptocurrencies, it's important to understand how these assets are treated and why disclosure is required on your yearly tax return. SARS mandates the disclosure of any income or gains from crypto assets, including digital wallets and crypto accounts. This includes exchange tokens (e.g., Bitcoin), non-fungible tokens (NFTs), and utility tokens.
If you’ve received crypto assets through employment, trading, or other income-generating activities, these must be declared on your tax return. Failing to disclose crypto assets can result in penalties and interest. SARS uses sophisticated tools to detect undeclared assets, so voluntary disclosure is always the best option.
By declaring your crypto holdings, you can avoid legal issues and stay compliant with tax regulations. The tax implications are complex, with potential Capital Gains Tax (CGT) and Income Tax liabilities. Keeping accurate records of all crypto transactions will ensure the correct calculation of your tax liability.
Steps to Disclose Your Crypto Assets
Gather Information: Collect all necessary information about your crypto assets, including transaction history, acquisition costs, and any gains or profits made.
Calculate Tax Liability: Use a crypto asset commercial calculator or seek professional help to calculate your tax liability, including both income tax and capital gains tax.
Submit Tax Return: Complete the SARS Tax Return form for income derived from crypto activities and the Capital Gains Summary for crypto capital gains and/or losses.
Make a Voluntary Disclosure: If you have any unpaid tax related to your crypto assets, use the SARS Voluntary Disclosure Programme (VDP) to voluntarily disclose and pay the tax owed
If you have any questions or need assistance with tax return, please do not hesitate to contact me. I am here to help you.
For more information, please visit our website www.anlo.co.za or give us a call on 011 6581324
