South African taxpayers with cryptocurrency investments face increased scrutiny after the country adopted the Crypto Asset Reporting Framework (CARF), giving the South African Revenue Service (SARS) greater visibility into global crypto transactions.
The framework came into effect on 1 March 2026 and forms part of an international tax transparency standard developed by the Organisation for Economic Co-operation and Development (OECD). It enables the automatic annual exchange of cryptocurrency transaction data between tax authorities around the world.
According to Nico Theron, founder of Unicus Tax Specialists, taxpayers should ensure they fully disclose their crypto assets and transactions.
“Having said that, taxpayers must not think they can cherry-pick what they want to declare given the greater visibility on crypto assets.”
Greater visibility for SARS
Theron says taxpayers should also pay close attention to SARS’ Draft Guide to the Taxation of Crypto Assets, published earlier this month.
“The message is clear that SARS has greater insight into international cryptocurrency movements, and it is telling taxpayers how it intends taxing the transactions.”
The combination of CARF and SARS’ updated guidance means taxpayers who have previously failed to declare crypto assets face greater audit risk.
Voluntary Disclosure Programme window could close
Theron warns that taxpayers declaring crypto assets for the first time in their 2025/26 tax return could be selected for audit.
If SARS uncovers previously undeclared crypto transactions during an audit, taxpayers will no longer qualify for relief under the Voluntary Disclosure Programme (VDP).
“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.”
He says the relief from penalties and potential criminal prosecution offered through the VDP would no longer apply.
Instead, Theron recommends taxpayers with historic undeclared crypto assets regularise their tax affairs before submitting their 2026 tax returns.
Although provisional taxpayers have until 22 January 2027 to submit their returns, he says supporting documentation for a VDP application should be prepared as soon as possible.
“That is the correct approach. Taxpayers should not assume that their crypto activity will remain unnoticed.”
Capital gains tax or income tax?
One of the biggest challenges remains determining whether cryptocurrency profits should be taxed as capital gains or income.
Theron says the same principles applied to other assets also apply to crypto.
The deciding factor is the taxpayer’s intention when acquiring the asset.
If cryptocurrency is purchased as a long-term investment to generate capital growth, profits are generally treated as capital in nature and may be subject to capital gains tax.
However, if assets are bought and sold regularly with the intention of making short-term profits, the proceeds are likely to be regarded as revenue and taxed as income.
The frequency and regularity of transactions are among the factors SARS considers when determining the correct tax treatment.
Careful disclosure remains essential
Theron says taxpayers should carefully consider how they disclose crypto transactions to avoid unnecessary disputes with SARS.
Accurate reporting and proper supporting documentation will help reduce the risk of penalties and lengthy tax disputes as SARS gains greater visibility into international cryptocurrency activity.
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