The Bitcoin industry in South Africa might be alive and thriving, but there’s still a lot of unanswered questions surrounding the practice.

Much like its currency predecessors, Bitcoin can be exchanged for value, with the differences being that it’s digital and centralised.

When earning a Bitcoin salary, though, how does one pay tax in South Africa?

You see, as the cryptocurrency market grows rapidly, it is being adopted as a payment method by increasing number of companies, reports MyBroadband.

Speaking to experts in the field, they began to piece together where the current “illegal” form of payment finds itself.

Broadcaster and Blockchain expert Simon Dingle explained that there “aren’t any clear answers” regarding how salaries are taxed if they are paid in Bitcoin:

He said it is unclear whether South Africans are taxed on the value of their salary at the time of payment to their Bitcoin wallet, or when they exchange their Bitcoin to rand.

Dingle said cryptocurrencies like Bitcoin are a difficult issue for regulatory authorities, as there is no practical way of policing their use.

Moving onto South African Bitcoin exchange company Luno, they advised that speaking to a registered tax professional on the matter is your best bet. Head of Growth at Luno, Werner van Rooyen explained:

From what I understand, you might be able to arrange for your salary to be paid in instruments other than your local currency, such as equity in a company, property, produce, and so on.

Doing so will still come with a tax burden, and probably a much higher administrative burden.

He also suggested it might be easier to buy Bitcoin, rather than get paid in Bitcoin, for the time being.

Speaking to the big boys, when MyBroadband asked the South African Reserve Bank about Bitcoin tax and regulation in South Africa, it “referred [them] to its position paper published in 2014”:

The South African Reserve Bank’s paper on virtual currencies distinguishes between E-money and cryptocurrency, with E-money “redeemable for physical cash or a deposit into a bank account on demand”.

According to the paper, cryptocurrencies are not defined as legal tender and “should not be used as payment for the discharge of any obligation in a manner that suggests they are perfect substitute of legal tender”.

So the age-old practice of exchange is actually illegal? Better stop all those swapping stints you have going on unless the all-powerful Rand is included. Pffft.

It’s time to move with the times, SARB, there are already lists of South African business and e-commerce companies that accept Bitcoin as a form of payment, albeit some through a payment processor.

[Check here and here for those lists.]

Because of SARB’s outdated answers, as Van Rooyen suggested it really is better to speak directly to a registered tax professional about what to do with your payments.

Local firm Galbraith | Rushby are our go-to guys as they regard you, the client, as a person rather than just another number in their books. Geddit?

Located in Woodstock, Galbraith | Rushby will answer all your questions, and will protect you from those unwanted tax payment consequences, just in case you find yourself being offered a Bitcoin in the near future.

After all, one Bitcoin is currently standing at a rate of R24 000 and is only set to rise.

Casual.

[source:mybroadband]