Original Research

An analysis of South Africa’s guidance on the income tax consequences of crypto assets

Namhla Vumazonke, Shaun Parsons
South African Journal of Economic and Management Sciences | Vol 26, No 1 | a4832 | DOI: https://doi.org/10.4102/sajems.v26i1.4832 | © 2023 Namhla Vumazonke, Shaun Parsons | This work is licensed under CC Attribution 4.0
Submitted: 15 September 2022 | Published: 28 February 2023

About the author(s)

Namhla Vumazonke, College of Accounting, Faculty of Commerce, University of Cape Town, Cape Town, South Africa
Shaun Parsons, College of Accounting, Faculty of Commerce, University of Cape Town, Cape Town, South Africa

Abstract

Background: A media statement issued by the South African Revenue Service (SARS) in 2018 represents the primary guidance available to South African taxpayers on the income tax consequences of crypto asset transactions.

Aim: This study assessed the adequacy of the guidelines available to South African taxpayers on the consequences of crypto asset transactions, and identified the income tax consequences for transactions not addressed in these guidelines.

Setting: This study compared the scope and depth of the SARS guidelines to guidance issued in other jurisdictions. This distinguishes it from other studies focusing on the theoretical income tax consequences of crypto asset transactions.

Method: The first phase of the study was an in-depth documental analysis to benchmark the SARS guidelines against the guidance of tax authorities in other jurisdictions. In the second phase of the study, a doctrinal legal research methodology was adopted to identify the income tax consequences of transactions not addressed by SARS, applying existing legislation and case law, and taking into account the guidance of the other selected tax authorities.

Results: The study found that the SARS guidelines did not comprehensively address all the crypto asset transactions addressed by the other selected tax authorities.

Conclusion: The study recommended that SARS provide comprehensive guidance to South African taxpayers on the income tax consequences of crypto asset transactions, the development of which would be supported by consequences identified in this study.

Contribution: This study contributes to the understanding of, and development of taxpayer guidance to address the income tax consequences of crypto asset transactions in South Africa.


Keywords

cryptocurrency; crypto asset; South African Income Tax; South African Revenue Service; tax literacy; tax compliance

JEL Codes

H24: Personal Income and Other Nonbusiness Taxes and Subsidies; H25: Business Taxes and Subsidies; H26: Tax Evasion and Avoidance

Sustainable Development Goal

Goal 16: Peace, justice and strong institutions

Metrics

Total abstract views: 2176
Total article views: 1985

 

Crossref Citations

1. Cryptocurrencies’ Impact on Accounting: Bibliometric Review
Georgiana-Iulia Lazea, Ovidiu-Constantin Bunget, Cristian Lungu
Risks  vol: 12  issue: 6  first page: 94  year: 2024  
doi: 10.3390/risks12060094