Significant local and international developments in the crypto asset taxation environment require taxpayers to tread with caution when submitting their tax returns for the 2026 Filing Season.
South Africa adopted the Crypto Asset Reporting Framework (CARF), effective from 1 March this year, increasing visibility of global crypto currency transactions materially.
Nico Theron, founder of Unicus Tax Specialists, says there is huge pressure on taxpayers to declare their crypto assets, and they should.
“Having said that, taxpayers must not think they can cherry-pick what they want to declare given the greater visibility on crypto assets,” he adds.
The CARF is an international tax transparency standard developed by the Organisation for Economic Co-operation and Development (OECD) to enable the automatic, annual exchange of cryptocurrency transaction data between global tax authorities.
Taxpayers should also take note of the Draft Guide to the Taxation of Crypto Assets published by the South African Revenue Service (Sars) at the beginning of this month. “The message is clear that Sars has greater insight into international crypto currency movements, and it is telling taxpayers how it intends taxing the transactions.”
The Voluntary Disclosure Programme window may close
Taxpayers who declare crypto assets for the first time in their 2025-2026 tax return will most probably be exposed to an audit. Once that happens and Sars identifies past (undeclared) crypto transactions the door to the Voluntary Disclosure Programme (VDP) will close, Theron cautions.
“If you choose to sweep the past under the carpet and Sars selects you for an audit, which they most probably would, the window of opportunity to apply for leniency under the VDP is no longer available.”
Relief against penalties and potential criminal prosecution will also be off the table.
Theron advises taxpayers with historic undeclared crypto assets to declare the assets – with the necessary guidance – under the protection of the VDP before submitting their 2026 tax returns.
The deadline for provisional taxpayers is 22 January 2027, however it will be crucial to prepare the necessary supporting documentation for a VDP application as soon as possible.
“That is the correct approach. Taxpayers should not assume that their crypto activity will remain unnoticed,” says Theron.
Capital or revenue? The intention test remains key
A vexing issue regarding the taxation of crypto assets remains the subjectivity in the capital revenue test. The same rules apply to crypto transactions when determining whether it is capital or revenue in nature.
The golden thread is the taxpayer’s intention when acquiring the asset. Buying an asset to use or hold as a long-term investment indicates a capital nature, whereas buying it to resell quickly at a profit makes it revenue in nature.
If the acquisition, holding and sale were speculative then it will be treated as revenue (income tax) and if the acquisition, holding and sale were capital growth then it is capital (capital gains tax). One test is the regularity or frequency of the transactions.
Theron advises taxpayers to give careful consideration about the way they approach their disclosures to prevent unnecessary disputes or potential hefty fines.