Income Tax
Trading Income
Earning income within the crypto-sphere is a relatively new concept and has become essential for many investors’ strategies. The expansion of Proof-of-Stake as a consensus mechanism, major lending platforms such as Celsius and ample De-Fi yield-farming opportunities, has meant the crypto-sphere is now littered with income-earning opportunities.
Remember: As soon as you earn 'income' through your crypto investments, SARS may view you as a trader, not as an investor. An amount may be considered as ‘income’ regardless of whether it is in fiat or in crypto.
Anyone who buys and sells, exchanges, mines or stakes crypto assets, needs to first consider if they are engaged in a trade, involving crypto assets, rather than simply assuming their gains will be treated as capital gains. Profits arising from crypto asset derivatives will generally be treated as trading income.
SARS generally views crypto assets being held as a speculative asset that is subject to income tax treatment. Capital gains tax treatment is only applied in exceptional circumstances.
Employment Income
If paid in crypto assets, the Rand equivalent at the earlier of receipt or accrual (unconditional entitlement) is taxable as “other income”, being subject to normal tax, at the effective tax rate of the respective taxpayer. In these cases, the costs a taxpayer can apply to reduce their tax liability are limited. See our detailed guidance on employment income.
Income Tax Transaction Types
Although SARS does not provide concrete guidance, here are all the possible transaction types where income tax will be applicable:
🤝Staking⛏️Mining🎈Airdrops👛'Employment Income'🌊Liquidity Pools💰DeFi Interest / Rewards2022/23 Income Tax Rates
See the new 2022/23 Income Tax rates here.
2023 Tax Year (1st March 2022 - 28th February 2023)
23 February 2022 - See the changes from the previous year:
1 - 226 000
18% of taxable income
226 001 - 353 100
40 680 + 26% of taxable income above 226 000
353 101 - 488 700
73 726 + 31% of taxable income above 353 100
488 701 - 641 400
115 762 + 36% of taxable income above 488 700
641 401 - 817 600
170 734 +39% of taxable income above 641 400
817 601 - 1 731 600
239 452 + 41% of taxable income above 817 600
1 731 601 and above
614 192 + 45% of taxable income above 1 731 600
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