Okay. So you've got in, bought some cryptos, hopefully seen your profits increase and now cashed out for a sizeable gain.
The only thing left to do, before you go spending all that money, is pay your taxes.
I know this is not the most exciting part of the guide, but it's potentially the most important.
You don't want SARS to come knocking at your door, because you didn't pay any tax.
That's what I'm going to explain in the sixth and final part of my beginner's guide to crypto investing.
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What’s SARS’ position on taxing your crypto profits?
There’s been a lot of confusion over if SARS will tax your crypto gains.
But as cryptocurrencies continue to gain massive traction in SA, the tax issue is bound arise.
In fact, in the beginning of 2018, South African Revenue Service (SARS) announced that it will clarify the tax implications of transacting in cryptocurrencies like Bitcoin this year.
SARS spokesperson said, “SARS is treating crypto-currencies under Capital Gains Tax, but it’s an area the revenue body needs to explore further”.
I don’t recommend you avoid paying CGT if you bank any crypto profits.
But here’s the good news…
Did you know that each and every year, SARS gives every individual an exclusion allowance from Capital Gains Tax (CGT)?
In 2006, the exclusion allowance was R10,000. And it has increased every year. Today it’s R40,000.
So what does the exclusion allowance mean?
Simply put, this exclusion amount means that you can bank R40,000 worth of capital gains each year without having to pay any CGT.
It doesn’t matter if it’s from shares, property or cryptos, you’re allowed to bank R40,000 worth of capital gains, every year.
But if for example, you bank crypto gains of R50,000, you’ll need to pay in tax (R10,000 x 16.4%). Jjust in case you don’t know, the 16.4% is the current SARS CGT rate for individuals. So you’re likely to pay this rate, until there’s further clarification from SARS this year.
When you look back in five or ten years, you’ll be able to say you were part of the crypo movement from the beginning
It’s been a long guide. But hopefully the knowledge you’re gained will eventually make you a whole lot of money, which will bring you a whole lot more freedom in your life.
You’re also now well versed on a technology that could, in all likelihood, have as big an impact on our lives as the internet has done.
By being in crypto now, you are part of something that is already changing the world. Not many people get to participate in something like this, they merely get carried along by it.
So when you look back in five or ten years, you’ll be able to say you were part of this movement from the beginning. And hopefully, you’ll have made a small fortune in the process.
Always remember, knowledge brings you wealth,
We just released a new red hot crypto pick
. Crypto King, Sam Volkering believes it could be the ‘Google’ of Cryptocurrencies”
. You can find all the details in the March issue of the South African Investor.