South African taxpayers involved in crypto transactions or holding digital assets should anticipate increased scrutiny and enhanced information sharing among tax authorities.
Image: Ziphozonke Lushaba / Independent Newspapers
IN the wake of the SA Revenue Service’s (SARS’s) implementation of the Crypto Asset Reporting Framework (CARF) on March 1, 2026, taxpayer uncertainty in this space has reached an all-time high.
To provide clarity and calm the masses of South African taxpayers engaging in crypto-related activity, SARS have, on March 6, 2026, issued a media statement confirming: “Individual taxpayers do not report directly under the CARF and must continue declaring crypto asset transactions through their normal income tax returns.”
On the flipside, a Crypto Asset Service Provider (CASP) must report certain crypto asset transaction information to SARS, which data may then also be exchanged with the over 120 other participating jurisdictions.
This framework aims to combat offshore tax evasion and illicit activities linked to crypto-assets through enhanced multilateral cooperation and automatic information exchange.
South African taxpayers involved in crypto transactions or holding digital assets should anticipate increased scrutiny and enhanced information sharing among tax authorities, emphasising the necessity for precise tax reporting and compliance in their income tax returns.
The same due consideration, if not a higher degree, must also be had when considering Financial Emigration from South Africa, and holding crypto-assets — Capital Gains Tax on Crypto Assets is real.
It is noteworthy that the investigation into South African taxpayers’ offshore interests has long been on the cards with SARS, with foreign asset/income disclosure notices being issued as far back as 2020, entailing a blanket disclosure of offshore assets.
The knock-on effect of this is the promotion of the automatic exchange of information, imposing a legal reporting obligation on the respective revenue authorities, as well as CASPs, per SARS’s recent media statement: “For service providers, the CARF provides clarity, consistency and a level playing field.
“For the tax system, it strengthens fairness, early risk detection and voluntary compliance. The CARF marks an important step towards a modern, transparent and globally aligned tax system.”
At the time, many taxpayers may have thought best to hide the revenue authority’s request under their mattresses, but now, there appears to be no escape for the non-compliant South African taxpayer, especially with crypto asset transactions hot on SARS’s radar.
To aid taxpayers in their quest for compliance, SARS has specifically included line items pertaining to crypto in individual tax returns, as a friendly reminder to taxpayers.
Following normal income tax rules, crypto-asset income can be taxed as either “gross income” or may be regarded as “capital in nature” and taxed under such paradigm.
Notably, and especially should there be a “bull-market”, taxpayers, under specific circumstances, are entitled to claim expenses associated with the crypto asset receipts or accruals, provided “such expenditure is incurred in the production of the taxpayer’s income and for purposes of trade”.
Where taxpayers opt to invest and hold their crypto-assets long-term, upon disposal, any gain or loss must be declared as part of the taxpayer’s taxable income.
Per SARS’ own website warning: “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.”
For the South African taxpayers wishing to rectify historical non-compliance by means of a voluntary disclosure of information, as is the case with most crypto-traders, or ensure their current compliance record remains unblemished, there are various solutions available from a legal standpoint.
The most proactive way to affect this disclosure is by means of a Voluntary Disclosure Programme (“VDP”) application. The VDP application allows you to legally declare any undeclared income/gains, but not be subject to the penalties which would generally stem from such a non-disclosure.
The 2026 Budget Speech has further proposed that taxpayers may, in addition, apply for a separate remission of interest — this proposed amendment will take effect from March 1, 2026.
This is the first prize from a compliance perspective and should be considered as a priority for all taxpayers who have not yet received any formal correspondence from SARS, pinpointing a specific liability owed.
Where you find yourself on the wrong side of SARS, there is a first-mover advantage in seeking the appropriate tax advisory, ensuring the necessary steps are taken to protect both yourself and crypto-assets from paying for your crimes of non-compliance.
However, where things do go wrong, SARS must be engaged legally, and we generally find them utmost agreeable where a correct tax strategy is followed.