The SA Revenue Service (SARS) has now established a specialised cryptocurrency unit to tackle crypto trading and investments, both within SA and abroad.

Shaun Parsons, Associate Professor of Taxation at the University of Cape Town, shared insights into the growing issue of tax compliance regarding crypto assets.

He highlighted that while the tax implications of cryptocurrency have always been clear, SARS may not have fully grasped the scale of non-compliance. With the increasing number of people engaging in crypto transactions, SARS is now addressing the issue more seriously.

The anonymity of cryptocurrency transactions has made it difficult for SARS to track and enforce compliance. However, Parsons pointed out that transactions on regulated exchanges provide platforms with necessary customer information, which SARS can use to reconcile tax filings and spot discrepancies.

He explained that SARS is particularly focused on large transactions and ensuring individuals aren't misclassifying their crypto trading as less burdensome capital gains.

Despite challenges with overseas exchanges, Parsons noted that SA is a signatory to the Crypto Asset Reporting Framework, an Organisation for Economic Co-operation and Development initiative that will lead to greater global cooperation between tax authorities.

This means that SARS will eventually gain access to information from foreign tax bodies, allowing them to track SA citizens’ crypto transactions internationally.

While taxpayers who have failed to declare their crypto gains can still rectify their filings, non-compliance carries significant penalties. Parsons stressed the importance of tax auditors, as SARS strengthens its efforts through its newly established unit and improved technologies.

--ChannelAfrica--