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Gifts to Other Persons
Gifting crypto assets is another aspect of the crypto-sphere where tax agencies, such as SARS, do not offer concrete advice.
Cryptoassets can be gifted through a multitude of mediums such as:
- Through centralized exchanges, where assets can be easily tracked and linked to your KYC information
- Self-custodial wallet gifting, completely anonymously
- Sharing private keys or ledgers with close friends and family
Remember to always confirm the recipient's wallet address with a small transaction first!
Without being able to directly track the movement of cryptoassets, let's find out how SARS has decided to tax any crypto gifts.
Through lack of definitive advice from SARS, we assume gifting crypto to others is seen as a disposal, triggering a capital gains tax event.
Unlike donations in South Africa, there is no annual exemption for gifts.
The recipient of the cryptoassets, will only be taxed once they decide to dispose of the asset.
Recipients cost basis' will be calculated at market value the day they receive their crypto assets.
Like recipients, the disposals value will be the fair market value of the crypto assets as you can see in the example below.
Annie and Mary are both crypto investors, frequently talking to each other about the market.
Mary's birthday is soon and Annie wants to gift her some TRAC as a present.
Annie sends 100 TRAC over to Mary's wallet on her birthday, worth R7,000 at the time of the gift.
(Consequently, this is now Mary's cost basis and Annie's proceeds)
Having bought her first 100 TRAC for R1,000, Annie must follow SARS First in First Out principles, leaving her with a gain of R6,000, of which 40% can be taxed.
R2,400 * 18% (6,000 * 40%) = R432 payable.
When Mary decides to sell her TRAC, she will use R7,000 as her cost basis.