Crypto asset declared financial product

crypto asset
24 Oct 2022

A crypto asset has been declared a financial product.

The Financial Sector Conduct Authority published the declaration in Government Gazette 47334 in terms of the Financial Advisory and Intermediary Services Act.

A crypto asset is defined as a digital representation of value that is not issued by a central bank, but is capable of being traded, transferred or stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility; applies cryptographic techniques; and uses distributed ledger technology.

The declaration came into effect on the date of publication.

Meanwhile, national treasury and the South African Revenue Service (SARS) recently briefed the national council of provinces on the 2022 Draft Tax Bills.

Treasury sought comment on the 2022 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (2022 Draft Rates Bill); 2022 Draft Revenue Laws Amendment Bill, the 2022 Draft Taxation Laws Amendment Bill (2022 Draft TLAB) and the 2022 Draft Tax Administration Laws Amendment Bill (2022 Draft TALAB) at the end of July 2022.

Parliament sought comment on the draft bills in September 2022.

According to treasury, the 2022 Draft Rates Bill was first published on Budget Day and gives effect to the tax proposals announced in Chapter 4 of the 2022 Budget dealing with changes to the rates and monetary thresholds to the personal income tax tables and increases of the excise duties on alcohol and tobacco.

“It has been revised to include changes tabled by the Minister in Parliament on 31 March 2022 and 31 May 2022 regarding temporary relief on the fuel levy as well as the postponement of the effective date of an inflationary increase in the health promotion levy of 4,5 per cent to 2.31 cents per gram of sugary beverages with more than 4 grams of sugar per 100 ml from 1 April 2022 to 1 April 2023.”

The 2022 Draft Revenue Laws Amendment Bill contains proposed amendments dealing with the “two pot” retirement system.

The 2022 Draft TLAB and 2022 Draft TALAB contain the remainder of the tax announcements made in Chapter 4 and Annexure C of the 2022 Budget Review.

Key proposals in the 2022 Draft TLAB include:

  • Progressive increase in the carbon tax rate for 2023 to 2030;
  • Vaping: Taxation of electronic nicotine and non-nicotine delivery systems;
  • Extension of the Research and Development tax incentive sunset date;
  • Impact of IFRS17 insurance contracts on the taxation of insurers; and
  • Reviewing the debtor’s allowance provisions to limit the impact on lay by arrangements.

Key proposals in the 2022 Draft TALAB include:

  • Advance rulings under the Customs and Excise Act;
  • Imposition of understatement penalty for employment tax incentives improperly claimed; and
  • Addressing tax compliance status system abuse.

The standing committee on finance was briefed on the draft bills in August 2022.

In the latest briefing to the select committee on finance, treasury and SARS pointed out that the 2022 Draft Revenue Laws Amendment Bill, dealing with the two-pot retirement system, will not be tabled by the finance minister during the Medium Term Budget Policy Statement on 26 October 2022, as further consultations are required.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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