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Concepts & events

Airdrops & forks: tax treatment

How airdrops and hard forks are taxed: when receipt is income, when value arises only on disposal, and what to record. Treatment is fact-specific and evolving.

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

Why airdrops and forks are tricky

Airdrops and forks deliver tokens you did not buy, which raises two questions: is the receipt taxable, and what is the base cost for a later disposal? The answer turns on the facts — and SARS practice in this area continues to evolve, so hedge and document.

Airdrops

  • Airdrop linked to a service or trade (you did something, promoted a project, or it accrues to a business): generally revenue at the rand market value on receipt. That value becomes the base cost for a later disposal.
  • Fortuitous airdrop (no work performed, where merely claiming the tokens is not work): not gross income under the SARS draft guide. On capital account its base cost is nil, so the full proceeds are taxed on a later disposal. If you hold the tokens as trading stock, section 22(4) gives a cost equal to market value on the date acquired. Record how and why you received it.

Forks

A hard fork that creates new coins (e.g. a chain split) is treated by substance. Where the new coins are income in nature, value them at market value on receipt, which becomes their base cost. Where they are a fortuitous windfall, the SARS draft guide treats them as outside gross income, so on capital account the base cost is nil and the full proceeds are taxed when you sell. If you hold them as trading stock, section 22(4) gives a cost equal to market value on the date acquired. Record the fork date and the prevailing market value either way.

The practical takeaway

Capture the date, quantity and rand value of every airdrop and fork as it happens. Reconstructing this later is hard and weakens your position in an audit. Coinfig flags unlabelled receipts so they do not silently distort your gain.

Not tax advice

Treatment is evolving and fact-specific — confirm with a registered tax practitioner.

Frequently asked questions

Are airdrops taxable in South Africa?
It depends. Airdrops linked to a service or trade are generally revenue at market value on receipt. A fortuitous airdrop is not gross income under the SARS draft guide, so on capital account its base cost is nil and the full proceeds are taxed on a later disposal. Document the facts.
How are hard forks taxed?
By substance. Where income in nature, value at market value on receipt. A fortuitous windfall is not gross income under the SARS draft guide, so its capital-account base cost is nil and the full proceeds are taxed on a later disposal. Record the fork date and prevailing market value.
What should I record for airdrops and forks?
The date, quantity and rand value at receipt, plus how and why you received them — this is hard to reconstruct later and weakens your position in an audit.

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