The committee was setup to develop a coherent government response to cryptocurrencies and a unified intergovernmental regulatory framework, Finance Minister Tito Mboweni told Freedom Front Plus MP Wouter Wessels in a written response to a parliamentary question.
The minister said that the working group includes representatives from the Financial Intelligence Centre, the Treasury, Financial Sector Conduct Authority, the Reserve Bank and the SA Revenue Service (Sars).
Mboweni said “It is anticipated that, following broad industry comment and participation, the crypto assets regulatory working group will be ready to release a final research paper on the subject during the course of 2019.”
He noted that Sars cannot accurately trace the number of capital profits declarations on cryptocurrencies, as the existing income tax return forms do not allow taxpayers to specifically declare capital profits in cryptocurrency transactions.
Within Sars, however, work is underway to consider the modification of the tax forms for the 2019 tax season in order to cover the description of other assets (including cryptocurrencies) by means of a specific field on the form.
Mboweni further said “Taxpayers who have made some form of declarations regarding cryptocurrency trades have captured such trade as a form of ‘other trade income’ or ‘other trade loss’, and have made reference to a description of digital/crypto currency trading (e.g. Bitcoin Cash, Litecoin (LTC), Ethereum (ETH), Zcash (ZEC) to name a few).”
Sars applies to cryptocurrencies normal income tax rules. The 2018 Taxation Laws Amendment Bill included amendments to the treatment of cryptocurrencies for the purposes of income tax and VAT. Mboweni said these amendments would ensure that cryptocurrencies losses can only be offset against cryptocurrencies profits (otherwise known as ring – fencing). He stated that the amendments would also clarify that cryptocurrencies cannot be classified as personal-use assets for tax purposes on capital gains and would treat cryptocurrencies as VAT financial services.