NFT (Non-Fungible Token)
Also known as: non-fungible token, NFTs
A unique blockchain token representing ownership of a specific item; buying, selling and minting NFTs all carry tax consequences.
Definition
A non-fungible token (NFT) is a unique token on a blockchain, often representing digital art, collectibles or in-game items. For tax, NFTs are crypto assets: selling an NFT is a disposal with proceeds less base cost, swapping crypto for an NFT is a disposal of that crypto, and creating (minting) and selling NFTs as a business can be revenue. Whether a gain is capital or revenue depends on intention, as with other crypto.
Example
You buy an NFT with 0.5 ETH (a disposal of ETH) and later sell it for 1 ETH. The NFT sale is a disposal: proceeds less the NFT's base cost.
Jurisdiction notes
- South Africa: NFTs are crypto assets for SARS; capital vs revenue turns on intention, and buying an NFT with crypto is a disposal of that crypto.