How to calculate and pay taxes on crypto trading and earnings in South Africa

Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions, it uses cryptography to secure transactions. One thing people love about cryptocurrencies is the fact that they don’t have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units. 

Cryptocurrency is a a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of carrying money around and exchanging it in the real world, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. 

Cryptocurrencies came into existence in the year 2009 and Bitcoin was the first cryptocurrency to exist and it was developed by Satoshi Nakamoto, up to date, Bitcoin remains the best and most popular coin in the cryptocurrency industry. As of today, there is more than 12,000 cryptocurrencies available in the industry and some of the top perfoming cryptocurrencies are Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Ripple (XRP), Solana (SOL), Avalanche (AVAX), Litecoin (LTC), Binance Coin (BNB), Cosmos (ATOM), Filecoin (FIL) amongst several other cryptocurrencies. 

When cryptocurrency was first launched, it was intended to be a medium for daily transactions, making it possible to buy everything from a cup of coffee to a computer or even big-ticket items like real estate. For a while, that failed to materialized but we are starting to see more and more businesses accepting cryptocurrencies and this shows that this indusrty is on the asscendancy and it is only wise for people to start looking at investing in cryptocurrency. This article seeks to detail how to calculate and pay taxes on crypto trading and earnings in South Africa.

Do I need to pay tax on Crypto in South Africa?

A number of people in South Africa do not have the necessary information when it comes to cryptocurrencies and one pertinent question they have is how much tax they have to pay on crypto in South Africa. It is important to realise that indeed you have to pay tax on cryptocurrency in South Africa, this knowledge is crucial for everyone trading in cryptocurrency because by paying your taxes on your crypto, you will avoid a run-in with the South African Revenue Service (SARS). SARS views cryptocurrencies as a digital representation of value not issued by a central bank. This means that crypto assets are not considered equal to fiat currencies such as the South African Rand but are instead considered to be an asset or trading stock for tax purposes.

Popular South African musician, Dr Malinga recently revealed how SARS had wiped his home clean and auctioned his furniture and belongings worth R500 000, although his case has nothing to do with crypto, it just proves that you do not want to be caught on the wrong side of SARS. According to SARS, crypto is subject to tax, and please note that you may pay Capital Gains Tax or Income Tax depending on the transaction and the intentions of your investment activities.

What are the impications of avoiding crypto tax?

To be honest, many young people are trading in cryptocurrencies without being aware of their obligations to the South African Revenue Service (SARS). You are advised to pay your crypto taxes because you can now be held criminally liable if you fail to file your tax returns, even if it was unintentional. Do not even think about underreporting or outright avoiding crypto taxes because the South African Revenue Service (SARS) has been granted a wide range of authorities that provide the tax agency with the required legal collection power to request financial data from third parties such as cryptocurrency exchanges, so they have all the information about your investment and trading activities. According to the information on the SARS website, ‘The onus is on taxpayers to declare all crypto assets-related taxable income in the tax year in which it is received or accrued.  Failure to do so could result in interest and penalties.’

How do I calculate the tax I need to pay on crypto in South Africa?

Calculating the amount of tax you need to pay is pretty basic to be honest because in order for you to pay your tax bill, you are required to know the amount of  your cumulative gains or losses. Please note that the amount of tax you will pay on crypto in South Africa depends on the specific transaction, the tax that applies and how much you earn. For crypto subject to Capital Gains Tax, individuals pay a maximum effective 18% tax rate depending on their total taxable income. For crypto subject to Income Tax, individuals pay between 18% to 45% in tax depending on their total taxable income. Up to now, it is not yet clear whether profits from cryptocurrencies should actually be taxed as personal income or as capital gains. 

Capital Gains Tax

The current Capital Gains Tax rate in South Africa for the 2023 tax year is 18%. Each individual is also entitled to an annual exclusion of R40,000 so that you only pay tax if your total capital gains during the tax year exceed this limit. After subtracting the annual exclusion from your total capital gains, 40% of the amount is taxed as ordinary income according to your income tax rate, while the other 60% is taxed as capital gains at a fixed rate of 18%.

Income Tax

Income tax is the normal tax you pay on what is considered taxable income. South Africa has a progressive tax rate system where the rates vary between 18% and 45% depending on your taxable income. Each person is also entitled to a tax threshold and a tax rebate. For people below 65 years of age, the tax threshold and tax rebate are R91,250 and R16,425 respectively for the current tax year. This means that you are only liable for paying income tax if you earn more than R91,250 during the period 1 March 2022 – 28 February 2023.

How to pay taxes on crypto trading and earnings in South Africa?

You are required to be fully tax compliant on your crypto trading activities through on time submission of returns and payments, to avoid penalties and interest being charged. Payments must be made in time, if the submission date falls on a weekend or public holiday, you need to submit the return/declaration together with your payment, if applicable, by the last business day before the weekend or public holiday.  

You will be excited to know that there are a number of payment options available to you when making the payments, these include 




SARS MobiApp

SARS Customs branch

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