Source: SARS
The guidelines place significant emphasis on a taxpayer’s intention when determining how crypto is taxed.
According to SARS, whether a person is classified as a trader or a long-term investor depends on their behavior, transaction frequency and the purpose for holding the asset.
An excerpt on how taxpayer intention is assessed, according to the proposed guidelines. Source: SARS
“It is important to consider the taxpayer’s intention at the time of acquisition, at the time of selling the asset, and whilst holding the asset, as a taxpayer’s intention regarding an asset may change over time,” the authority said. SARS added that this requires a broad assessment of all relevant facts and circumstances.
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The guidelines also say crypto assets may fall under South Africa’s donations tax, as the assets are treated as “property” under tax law, with tax rates ranging from 20% to 25%, depending on the value of the donation.
The draft guidance is not final law and is open for public comment until August 31. SARS said it is intended to attempt to provide interpretive clarity rather than introduce new legal obligations.
South Africa has emerged as one of Africa’s largest crypto markets. According to Chainalysis’ October 2024 report, the country received about $26 billion in crypto value during the one-year period covered by the study.
Chainalysis also found that institutional and professional-sized transactions were the largest contributors to total value received, particularly from late 2023 through the first quarter of 2024, highlighting a shift toward larger and more structured market activity.
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