Cost-basis methods

FIFO vs specific identification under SARS

SARS accepts FIFO and specific identification for crypto cost basis — but not weighted average. How each method works, a worked example, and why consistency matters.

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

What the method does

When you sell part of a holding you bought at different times and prices, you need a rule to decide *which* units you sold — because that decides their base cost, and therefore your gain. In South Africa, SARS accepts FIFO and specific identification. It does not permit weighted-average cost for identical assets under the Eighth Schedule.

FIFO (first-in, first-out)

Under FIFO, the units you acquired first are treated as the units you disposed of first. It is simple, defensible and consistent, which is why it is the default for most South African crypto taxpayers and the method Coinfig applies across connected accounts.

Worked example

You buy 1 BTC at R400,000, later buy 1 BTC at R600,000, then sell 1 BTC for R700,000. Under FIFO the unit sold is the first one (base cost R400,000), giving a R300,000 gain. Your remaining holding carries a R600,000 base cost.

Specific identification

Specific identification lets you nominate the *actual* units disposed of — useful for tax planning (for example, disposing of higher-cost units to reduce a gain). But SARS expects you to genuinely identify and substantiate the specific units, with records that tie a disposal to a particular acquisition. Without that evidence, fall back to FIFO.

Why consistency matters

Whichever permitted method you adopt, apply it consistently year on year and keep the workings. Switching methods to flatter a result invites challenge. Under CARF reporting from 1 March 2026, your method and figures should reconcile cleanly to exchange data.

Not tax advice

This is general information. Confirm your method and records with a registered tax practitioner.

Frequently asked questions

Which cost-basis methods does SARS accept?
FIFO (first-in, first-out) and specific identification for identical assets under the Eighth Schedule. Weighted-average cost is not permitted for individuals.
Is FIFO mandatory in South Africa?
No — FIFO is the common default and is widely accepted, but you may use specific identification where you can genuinely identify and substantiate the units disposed of. Apply your method consistently.
Can I use a different method each year?
You should apply your chosen permitted method consistently. Switching methods to flatter a result invites challenge from SARS.

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