SARS has established a specialised cryptocurrency unit to specifically target crypto trading and investing in the country and abroad, says BusinessTech.

The unit will have an unlimited purview and SARS has confirmed its ability to receive information directly from local crypto-asset exchanges to ensure non-compliance is difficult and costly for taxpayers.

According to experts at Tax Consulting SA, the scope extends beyond just crypto trades.

International co-operation and automatic information exchanges significantly increase the range of SARS’ non-compliance radar. SARS’ crypto unit is made up of highly trained professionals with very specific skills, Tax Consulting SA said.

The division will be able to open historic tax periods, conduct in-depth audits and is authorised to uncover non-compliance at all levels.

'This ranges from a standard verification, and in instances where taxpayers have, in fact, made a loss on their crypto activities, to extreme cases where SARS re-categorises proceeds from crypto disposals, from capital gains to income,’ the tax experts said, adding that SARS being able to re-categorise proceeds can have a staggering impact on a tax bill.

This means the process could shift the tax rate from the 18% capital gains tax rate for individuals to as much as 45%, depending on the individual taxpayers’ marginal tax rate.

'Taxpayers must convince SARS that their crypto holdings are capital in nature; a near-impossible task without meticulous records, legal arguments, and possibly a costly dispute,’ said Tax Consulting SA.

It also said crypto traders shouldn’t assume that notices requesting information are for data gathering – SARS already knows and wants verification more than needing to gather data.

Further, recent court cases have shown that the taxman is able to take money directly from bank accounts if taxes are unpaid.

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