An important requirement in South African tax law is that taxpayers must retain their records for at least 5 years after filing their return.
The type of records to be kept are books of account and documents that demonstrate the liability or non-liability of the taxpayer. This may include CSV files or downloads of the wallet activity from each crypto asset exchange wallet, as well as calculations prepared for the taxpayer such as a Recap report.
Records must include:
• the type of crypto asset
• date of the transaction
• if they were bought or sold
• number of units involved
• value of the transaction in South African rands (as at the date of the transaction)
• cumulative total of the investment units held and gain or loss for the year
• bank statements and wallet addresses, in case these are needed for a verification or audit.
Crypto assets are obtained, administered, exchanged, used and linked to fiat currency electronically or digitally. It is reasonable to request electronic records with full details of transactions and any supporting valuation records for the acquisition and disposal tax points.
Exporting a copy of your data from the exchanges and wallets, on a regular basis, is good practice.
SARS provides further guidance on record-keeping requirements here:
There could be many reasons for missing data – not taking records before leaving an exchange, historical data being unavailable, exchanges closing, etc. In South Africa, the responsibility for record-keeping lies with the user, so you should prioritise this moving forward.
Unfortunately, sometimes missing data is simply untraceable and can only be identified as such. If this is the case, we recommend that you consult with a professional tax advisor to address this with SARS upon inquiry.
After filing your return, you may be selected for verification or audit. A verification is where SARS requests relevant documents and information to compare against your disclosures. This often happens in cases where you declare amounts that SARS does not already have from third parties (such as employers and financial institutions).
If you are selected for verification, you will be notified by SARS through an official letter. This letter will indicate the due date / time frames within which you must submit the documents and information. The time frame provided is generally 21 business days (not counting weekends and public holidays).
After submitting the requested material, if SARS still requires more information, they will notify you of this and the specific information needed.
An audit, however, is an investigation into your compliance. This is a much more aggressive and intrusive SARS process and should always be treated sensitively. SARS will start by notifying you that your return is subject to audit. If you are notified by SARS of an impending audit, be sure to urgently contact a professional tax advisor to assist.
Finding missing records is problematic and there are limited ways of finding your transaction history. A couple of suggestions:
- Check bank statements for any fiat deposits or withdrawals you may have made into or out of the account
- Check through any historical data that you do have to see if you can track any movement of assets across accounts/exchanges
- Get in touch with exchanges you no longer use to request data they may still have.
You can create a custom account within the Recap app and try to collate the missing transactions using the ideas above and from memory. You may get warnings for missing acquisitions which you would need to add.