HIFO (Highest-In, First-Out)
Also known as: highest-in first-out, highest cost first out
A cost method that disposes of the highest-cost units first to minimise the reported gain — a form of specific identification.
Definition
HIFO (highest-in, first-out) treats the units with the highest base cost as sold first, which minimises the gain reported on each disposal. It is effectively a specific-identification strategy. HIFO is used in some jurisdictions where specific identification is permitted, but in South Africa FIFO is the generally accepted method for identical crypto assets, so HIFO should not be assumed.
Example
You hold BTC bought at R400,000 and R600,000. Selling 1 BTC under HIFO uses the R600,000 base cost, producing the smallest gain of the available lots.
Jurisdiction notes
- South Africa: HIFO relies on specific identification, which is not the default for identical crypto assets under South African practice.