A South African tax expert, Thomas Lobban, has warned non-tax paying crypto traders that they now face possible jail time if the South African Revenue Services (SARS) decides to lay tax offense charges against them. He adds that this threat of jail time similarly applies to South African crypto traders that use offshore exchange platforms to trade or store their crypto assets.
Lack of Guidance Blamed
Lobban’s warning follows reports earlier in the year which suggested that changes to South African tax laws may have made it “easier for SARS to secure criminal convictions for tax offences.” The warnings also follow reports in June which suggested that SARS had asked “independent South African crypto platforms to provide it with information pertaining to its client base.”
However, despite this dire warning, Lobban — a legal manager at a local tax consultancy firm, Tax Consulting South Africa — admits that many crypto traders are not aware of the extent of their tax liabilities. The expert partly places the blame on SARS which he says has not done enough to guide crypto holders. He explained:
The lack of any meaningful guidance from SARS has not helped the situation either, leaving crypto investors with nothing more than their own best guesses about the correct tax treatment to be applied in each case.
Lobban also blamed what he calls “very strange beliefs about tax and crypto-assets” as the other main reason why many crypto holders are not paying taxes fully. He said due to these beliefs, many crypto traders still think a tax liability only arises “upon withdrawal.”
South Africans Trading on Foreign Crypto Exchanges Also Targeted
The tax expert also notes that while SARS is seemingly “hesitant to provide guidance on the correct tax treatment,” it has nonetheless been working to improve its information-gathering mechanisms. It is such mechanisms that the revenue collector hopes to use when pursuing South African crypto holders that trade on offshore exchanges. Lobban said:
SARS can request the collection and provision of information in relation to a taxpayer from other revenue authorities globally, as well as request assistance in the collection of tax, in terms of the many tax treaties it has in place.
In the meantime, Lobban urged South African cryptocurrency holders and traders who are not sure of their tax obligations “to approach SARS first and declare crypto profits and losses in their returns.” By doing this, they stay in SARS’ good books and avoid sanctions.
For those with an outstanding historic tax liability, Lobban says there are avenues for correction without the threat of criminal liability. However, once SARS notifies them of an impending or potential audit, options available to taxpayers become severely limited.
What are your thoughts on this story? Tell us what you think in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Credit: Source link
