The Income tax treatment of cryptocurrency trade in South Africa

Dissertation (LLM (Tax Law))--University of Pretoria, 2022.The income tax treatment of cryptocurrency is a subject of great debate for private investors and governments. The nature of crypto-currencies makes it essentially difficult to regulate from a tax perspective. Among the difficulties are the fact that they are not bound by specific country borders and that they don’t “fit neatly into established asset categories”. Recently, The South African Revenue Service (SARS) began to invest in Information Technology capabilities to analyse financial data and identify transactions in and out of crypto platforms. What this shows is that a subject which has always caused controversy could potentially take its place at the economic forefront of South Africa as the 4th Industrial Revolution approaches. The trade of cryptocurrency is well becoming a heated topic for tax law. Not only in SA, but across the world. As a newly emerging form of trade, finding an effective tax regulatory framework is proving to be difficult for SA as cryptocurrency challenges economic principles regarding tax law and the exchange of money to its core. Without effective procedures regulating the tax treatment of cryptocurrency, traders of cryptocurrency, SARS and the economy stand to be adversely affected. Not only that, but it puts to question the South African Reserve Bank’s ( hereafter “SARB”) position as the sole issuer of currency in South Africa. Cryptocurrency is not recognised as a form of currency in South Africa which already elucidates that multiple factors need to be considered for the correct income tax treatment of cryptocurrency transactions.Mercantile LawLLM (Tax Law)Unrestricte