According to a report, the South African Revenue Service (SARS) has sent out audit requests to taxpayers asking them to disclose their cryptocurrency trades and purchases. Taxpayers that fail to correctly disclose their income from bitcoin or other cryptocurrencies may be “liable to a fine or imprisonment for up to two years.”
SARS Tracking Non-Compliant Taxpayers
In the report, which is based on statements made by Tax Consulting South Africa, cryptocurrency traders are now required to state the purpose for purchasing the digital assets. In addition, crypto traders must submit a “letter from the trading platform(s) confirming the investments and the relevant trading schedules for the period and bank statements.”
However, as Tax Consulting South Africa observes, this changed approach by SARS could spell trouble for taxpayers. According to the tax consulting firm, “it is no longer material whether the taxpayer concerned had justification for such non-disclosure or false statement made.” Further, this change to the audit request process means “SARS is actively cracking down on non-compliant cryptocurrency traders in South Africa.”
“It is feasible to understand that SARS is in the process of ensnaring culpable taxpayers who have not disclosed their cryptocurrency-related trading profits and/or losses,” says Tax Consulting South Africa.
