> For the complete documentation index, see [llms.txt](https://docs.recap.io/south-african-tax-guide/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.recap.io/south-african-tax-guide/transaction-types/purchases-using-crypto.md).

# Purchases Using Crypto

![](/files/XiMsMN5Zr54Ds1g4PKVp)

## How Are Purchases Taxed?

More and more opportunities to purchase goods and services with crypto are appearing, with some home builders even offering houses for sale in Bitcoin.

When a service or product is bought with cryptocurrency, the crypto assets are considered to be *disposed* of, at their current market value.

{% hint style="danger" %}
Cryptocurrency cards, such as Crypto.com's VISA card, use fiat funds and only reward users in cryptocurrency. No disposals occur.
{% endhint %}

Difficulties occur when considering SARS cost basis method of FIFO (First in First Out), as purchases with crypto assets are often small and frequent. 

### Tax Treatment

SARS has stated that FIFO is used for crypto calculations, making purchases with cryptocurrency akin to selling crypto for [fiat](/south-african-tax-guide/transaction-types/selling-crypto-for-fiat.md), or other crypto assets.

### Example

Michael recently bought a weekend vacation for himself and his girlfriend. The travel company allowed him to pay through Bitcoin.

Having spare Bitcoin, Michael thought it would be a good idea and went ahead.

Michael bought Bitcoin twice in the last year:

* R10,000 worth in January priced at R400,000
* R25,000 worth in March, priced at R500,000.

{% hint style="warning" %}
**Remember:** SARS uses a *First in First out* policy for an assets cost basis. Here's how:
{% endhint %}

The weekend trip cost him R15,000 in total. As he bought the trip with crypto, the R15,000 worth of Bitcoin was considered a disposal. (One Bitcoin is currently valued at R600,000)

Using FIFO, Michael must negotiate two cost basis':

* First R10,000 worth was bought when Bitcoins price was R400,000, making a gain of R5,000 (R10,000 \* 50%).
* Second R5,000 bought at a Bitcoin price of R500,000, reducing his gain to 20% or R1,000 (R5,000 \* 20%)

Michael's total gain was **R6,000**, of which only 40% of it can be taxed. (R2,400)

Total Payable: **R432** (R2,400 \* 18%)