Yesterday evening whilst in the local supermarket they had the 6 o clock news on and they mentioned crypto taxes and what the authorities were doing. I could not hear it very clearly so I thought it would be a good idea being in crypto to check out what has changed.
Just for some back ground the South African Government has been recouping less and less tax each year. A report a few years ago stated that just 9% of the population contribute to more than 40% of the total tax revenue. Many of these individuals have in the higher tax brackets have left so it is not that far fetched to see 6% or 7% covering the 40% these days.
The latest stat has the country having a total of 7.1 million tax payers covering 90% of the tax revenue this is down from 7.4 million tax payers in 2023. The shortfall is roughly R56 billion and hence why the government is desperate to find more revenue. They are now coming after crypto investors trying to find extra funds.
The difference this year than previously is that the South African Revenue Service has deployed Artificial Intelligence to track down traders. I have to admit this is slightly worrying and why leaving a foot print in and out of crypto is something I have been carefully avoiding. I have never cashed out any crypto and next year I would have been in crypto for 7 years.
The government is still harping on about foreign exchange stating if you buy Bitcoin locally and send it to an exchange off shore you are violating the country's forex laws. Of course that are going to say this even though they do not recogise crypto as a currency.
Anyone avoiding the crypto taxes faces fines of up to 150% which s slightly absurd and crazy. If you sell Bitcoin for an altcoin that is seen as a taxable event of which they expect to receive taxes on that transaction at a rate of 45%. Again the 45% is targeted at staking rewards, mining and air drops which they can take a hike.
Long term holding of mining income does qualify for a lower capital gains tax rate. I still believe they have no real clue what they are doing and will be taxing those individuals that are trading and removing any profits back into FIAT. Is it really worth it taking out and placing a target on your back because I do not believe it is until you are ready and have a plan in place. I do think the percentage of people accumulating like many of us are is so very small and we are less than 10% of those involved in crypto doing this.
Later next month I will be spending a few days in Portugal opening a bank account manly with my crypto in mind. The plan is to buy a property within the next two years in Portugal ad be the destination where I declare my crypto. Currently I have two choices being South Africa which is a no go and the UK which is better than SA. I have also looked at Dubai, but this is not really a place I would like to reside in the future ad why I have my eyes firmly set on the Algarve in Portugal.
We all have choices and the more dollar value we have in our crypto portfolio the more we can make better informed decisions. Imagine having $5 million which is not out of the reals of possibilities and you have to cough up 45% or 40% and you could have bought a $2 million property instead and kept the rest of your portfolio. Accumulating your crypto portfolio has been tough to achieve taking many years so why give a large chunk away when you do not have to. I am still working on a grey area that I believe will work and need to hit @stevelivingston up shortly the next time I am in the UK to run through some ideas that have been mulling around my brain for over 4 years.
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well my plan is what it has always been, to not let papa gubment know that I even have anything to do with crypto at all. A family member of mine was hounded by the revenue service in USA for years over suspected profits off of crypto. The IRS didn't even have any proof but just pestered this family member of mine endlessly. We go to the point where we started to wonder if this level of harassment is even legal. Right about the time that my family was about to lawyer up, the harassment stopped.
I can't stand the government for the most part. Anyone's government... not just my own.
I do think there are some leaving themselves wide open and will pay the price. Like you I have been very careful and plan to continue accumulating in the shadows.
sigh
Every year it gets harder and harder to survive. Now they want to take away the little bit I make extra that I make by literally working an extra job...
If things go more sideways I am going to just TAKE the resources I need and live off all grids and they can go sit on a hot iron for their tax money! 😡
Yes it does not make this any easier and why we have to be careful how we operate in and out of crypto. It may sad mad but I am definitely going to Portugal next month to prepare for the bull run and who knows depending on how well my portfolio performs buy a property next year some time.
Yeah. This is only going to get worse. In my country, it doesn't even matter if you got it somewhere else physically. They still get there cut.
Yes they want to get their cut and are going to try and find a way and why finding a place to cash out that is legal and friendlier than other places is what we should all be looking for.
I think the only way here is going to be to do it through a tax-deferred/free retirement account. That will make me wait until retirement age to get it, but at least it will save taxes.