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Capital vs revenue: a SARS flowchart

A practical flowchart for the question that sets your rate: is your crypto gain capital (max ~18%) or revenue (up to 45%)? Intention, frequency, and why evidence beats assertion.

Last reviewed: · Reviewed by Johan Pretorius, Registered Tax Practitioner

The decision that sets your rate

In South Africa, whether a crypto gain is capital (Eighth Schedule, max effective ~18% for individuals) or revenue (income tax at 18% to 45%) is the single biggest driver of your bill. There is no fixed holding period: SARS decides on your intention and the objective facts.

A practical flowchart

Work through these questions for each holding:

  • Did you acquire it intending to hold for long-term growth? If clearly yes, that points to capital.
  • Did you acquire it intending to resell at a profit, or as part of a profit-making scheme? If yes, that points to revenue.
  • How frequently do you trade? High frequency and short holding periods point to revenue.
  • Is it organised like a business? Bots, leverage, dedicated capital and systematic dealing point to revenue.
  • Is crypto a main or substantial income source? That points to revenue.
  • Do you buy-and-hold a small set of assets, reinvesting rather than realising? That points to capital.

No single factor is decisive. SARS weighs the whole picture.

Intention can change

An asset held as an investment can be brought into trading stock (and vice versa). A change of intention itself has tax consequences, so document when and why your intention changed.

Why evidence beats assertion

You cannot simply *declare* a gain capital. Keep contemporaneous records (notes at acquisition, your trading patterns, holding periods), because a justification written years later carries little weight in an audit.

Not tax advice

The capital-vs-revenue line is fact-specific. Confirm with a registered tax practitioner.

Frequently asked questions

Is there a holding period that makes crypto capital in South Africa?
No. Unlike Australia, South Africa has no fixed holding period. SARS decides capital vs revenue on intention and objective facts such as frequency, organisation and the nature of your activity.
How do I prove a gain is capital?
With contemporaneous evidence of long-term investment intention: notes at acquisition, buy-and-hold patterns and long holding periods. A justification written years later carries little weight.
Can my treatment change over time?
Yes. An asset held as an investment can become trading stock (and vice versa). A change of intention has its own tax consequences, so document when and why it changed.

Sources

Primary sources for South Africa: browse the official documents