# Purchases Using Crypto

![](https://1369014650-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FwDn56IBmTGJCP7opAx1T%2Fuploads%2FNjNAeSIr4C22q2XDlVng%2FSouth%20African%20Crypto%20Tax%20-%20Purchases%20using%20Crypto.png?alt=media\&token=87312136-f75e-4865-8a8c-57a1ecb35d2e)

## 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.

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Cryptocurrency cards, such as Crypto.com's VISA card, use fiat funds and only reward users in cryptocurrency. No disposals occur.
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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](https://docs.recap.io/south-african-tax-guide/transaction-types/selling-crypto-for-fiat), 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.

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**Remember:** SARS uses a *First in First out* policy for an assets cost basis. Here's how:
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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%)