SARS pulls the trigger on taxpayers – watch out for this notice
Following the South African Revenue Service (SARS) warning that it would sniff out crypto trades among 5.8 million taxpayers, letters are now being sent to traders, indicating that the taxman has the information it needs.
According to tax experts at Tax Consulting SA, crypto traders and investors in South Africa have started getting notices from SARS stating that the revenue service has received third-party information about their holdings and trades.
Earlier in October, SARS issued a clear warning to crypto traders that it would be sourcing information from crypto exchanges and other third parties about this particular asset and would hold traders liable for the necessary tax payments.
SARS noted that close to 6 million South Africans hold a crypto asset, with Southern Africa boasting the largest uptake of Bitcoin in the world.
It said it is concerned that these crypto assets and trades are not being declared on taxpayers’ tax returns, adding that it is legally obligated to account for any income or assets held by taxpayers.
“Consequently, SARS is engaging with the Financial Sector Conduct Authority (FSCA) regarding the provision of information on registered Crypto Asset Service Providers (CASPs). SARS is also receiving information directly from the local exchanges,” it said.
This has now translated to direct action, with messages sent to these taxpayers informing them of their obligations.
The notices read:
NOTICE REGARDING CRYPTO ASSET TRADING ACTIVITIES
The purpose of this letter is to remind you to disclose your tax position in relation to crypto asset trades that you may have made. We have received information from crypto exchanges that indicate you have engaged in trades and may have omitted to correctly disclose this on your returns. In this regard, please take note that –
- Crypto asset transactions are subject to taxation in South Africa, Any gains or profits derived from trading or holding crypto assets may be taxable.
- Taxpayers trading in crypto assets will be liable for taxable income while taxpuers holding crypto assets as investments will be subject to Capital Gains Tax (CGT) above the annual CGT allowance.
- By not declaring your crypto assets gains or income, you may be in contravention of tax laws and regulations.
According to SARS, crypto transactions are subject to tax whether they involve trading, or constitute disposals of investment assets.
For traders, crypto profits are typically regarded as taxable income, while those holding crypto for investment are liable for Capital Gains Tax (CGT) on gains exceeding the annual CGT allowance.
SARS Commissioner Edward Kieswetter emphasized that the agency is committed to making compliance straightforward and cost-efficient, but will be “hard and costly” on those who choose to evade their obligations.
Tax Consulting warned that failing to declare crypto gains or income could lead to severe consequences, including penalties, interest, and potential criminal sanctions.
To help taxpayers regularize their crypto disclosures, SARS recommends the Voluntary Disclosure Programme (VDP)—a mechanism for individuals to correct past omissions without penalties (except for cases involving gross negligence or intentional tax evasion).
“However, eligibility for the VDP depends on approaching SARS before an audit is initiated,” the group said.
Taxpayers are urged to declare any previously undisclosed crypto income or gains within 21 days of receiving a SARS notification. If not, SARS may initiate an audit, and impose penalties, interest, and potentially more severe actions.
Kieswetter warned previously that “SARS will pursue all without fear, favour or prejudice,” underscoring SARS’ intent to use technology, artificial intelligence, and data algorithms to identify and pursue cases of non-compliance across all platforms.
“With SARS’ enhanced enforcement measures and a broad data-sharing network, this serves as a wake-up call to crypto traders and investors. Proactive compliance through full disclosure is no longer optional; it’s essential,” Tax Consulting said.
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