Faculty of Commerce, Law and Management (ETDs)
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Item Reconsidering the debate relating to the proposals for the regulation of cryptocurrencies in South Africa(University of the Witwatersrand, Johannesburg, 2023) De Sousa, Michaella Alexandrine; Kawadza, HebertWords cannot express my gratitude to my supervisor, Professor Herbert Kawadza for his vital patience and feedback. His guidance and vast knowledge in commercial and banking law was the main reason I hoped to have him as my supervisor for the completion of my LLM Research Report, without him I would still be lost in my drafting. I am extremely grateful for the guidance and encouragement of my two very close colleagues and mentors, Daven Dass and Alicia Raymond, their encouragement and conversation pushed me through writer’s block and self-doubt. I certainly could not have undertaken this journey without my strong support system and the most important people in my life, my father, Rui de Sousa; my sister, Claudia de Sousa; and partner, Nicholas Elliott. Their belief in me and ongoing patience in reading and rereading every iteration of this LLM Research Report will always be appreciated. This degree would never have been completed without them. As the adage goes, I am because they are, and I will always be indebted to them. Lastly, this LLM degree is for my late mother, Carla de Sousa, without her guidance and belief I would not be where I am now, and I will always be grateful to herItem The tax implications of crypto assets in South Africa(University of the Witwatersrand, Johannesburg, 2023) Mistry, Riya; Kolitz, MaeveThe primary objective of this research report is to examine the current South African legislation and guidance on the taxation of crypto asset transactions. More specifically, this research report will focus on identifying any inadequacies in the legislation and guidance issued by the South African Revenue Service (SARS) and provide suggested solutions to these inadequacies. In 2018, SARS issued a media release (South African Revenue Service [SARS], 2018) to clarify its stance on the tax treatment of crypto assets and issued a list of frequently asked questions on crypto assets which was revised in 2021 (SARS, 2021a). More recently, The Commissioner of SARS, Edward Kieswetter, confirmed that any undisclosed holdings of crypto assets would be a prioritised area of focus for the tax revenue authority in the 2021 year of assessment (Tax Consulting South Africa, 2021). This indicated that SARS would be focusing more on the taxation and verification of crypto asset transactions in the near future. In August 2021, SARS provided further guidance on the taxation of crypto assets on their website. According to this guidance, normal income tax rules apply to crypto assets, and affected taxpayers must declare profits and losses from crypto assets as part of their taxable income. Taxpayers are further required to declare all taxable income related to crypto assets during the tax year in which it was earned or accrued; if not, the taxpayer will be subject to penalties and interest (SARS, 2021b). The findings of this research report are that the acquisition, exchange, and disposal of crypto assets represent separate transactions with clearly identifiable income tax consequences in South Africa. The income tax consequences are dependent on whether the accrual and the amount are of a capital or revenue nature. This research report seeks to identify inadequacies in the legislation and guidance issued by SARS on the taxation of crypto assets. This will be achieved by conducting a comparative analysis between the legislation and guidance issued by the Australian Taxation Office (ATO) in Australia, the South African Revenue Service (SARS) in SouthItem The tax implications of crypto assets as per the income tax act 58 of 1962 from a South African perspective(University of the Witwatersrand, Johannesburg, 2022) Marek, AndrzejCrypto assets have characteristics akin to those of virtual and financial products. They are currently utilised in payment transactions, financial instruments, investments, and corporate coupon bonds1 (The World Bank, 2017; HM Treasury et al., 2018; FCA 2021). These types of assets can be thought of as intangible digital assets whose creation, sale, or transfer are controlled by cryptographic technology and are shared electronically via a distributed ledger (Bartolucci & Kirilenko, 2020). Crypto assets are purchased for different reasons, such as speculative investing (a perceived increased future value), as a medium of exchange in facilitating transactions for goods and/or services, or for access to specific products, services, and utilities (Intergovernmental Fintech Working Group, 2021). Guidance on crypto assets issued by the Financial Conduct Authority of the United Kingdom (Financial Conduct Authority of the United Kingdom, 2019) categorises crypto assets into three different classes, namely Utility, Security and Exchange Tokens. The report aims to gain a comprehensive understanding of the commercial and economic substance of crypto assets and use this as a guide on how crypto assets should be taxed from a South African perspective. Further to this, the report analyses the separate classes of crypto assets available to taxpayers, namely, asset backed tokens, utility tokens and security tokens, and provides insight into the tax treatment of these specific classes. South Africa has adopted a stance in which the tax implications are dependent on the intention of the taxpayer. If the taxpayer regularly sells crypto assets, the presumption is that the taxpayer’s intention is to make a trading profit and taxable as a revenue profit (Haupt, 2022), whereas, if the taxpayer neither sells, exchanges nor spends the crypto asset, the indication is that taxpayer is holding it as a store of value and therefore as a capital asset (Haupt, 2022) and this is subject to Capital Gains Tax