In South Africa, forex trading is legal and regulated, but it comes with important tax and reporting obligations. SARS — the South African Revenue Service — oversees the taxation of income generated through forex trading, whether it’s done professionally or as a side hustle.

This article explains how SARS treats forex trading, what traders must declare, and how to stay compliant with South African tax laws.

Key Takeaways

• SARS treats forex trading profits as taxable income
• Traders must declare both realised and unrealised gains where applicable
• Offshore trading must comply with exchange control regulations and allowances
• Losses can be deducted in specific circumstances
• Non-compliance with SARS can lead to penalties and audits

Is Forex Trading Legal in South Africa?

Yes. Forex trading is legal in South Africa and is regulated by the Financial Sector Conduct Authority (FSCA). However, the responsibility of declaring profits and paying taxes falls to the individual trader.

How Does SARS Tax Forex Traders?

Forex trading profits are taxed under the Income Tax Act. The way profits are taxed depends on whether the trader is classified as:

• A hobbyist/part-time trader: Profits are usually treated as capital gains.
• A full-time trader or business: Profits are taxed as income under normal income tax brackets.

Key Tax Categories

Type of Trader	Tax Applied	Notes
Individual casual	Capital Gains Tax	Only on realised gains
Full-time trader	Income Tax	Profit is seen as active income
Corporate trader	Company Tax (28%)	Applies if trading via a business entity

SARS and Offshore Forex Trading

If you use offshore brokers, SARS still requires you to:

• Declare profits in ZAR (South African Rand)
• Report all foreign income on your annual tax return
• Comply with SARB exchange control rules:
  • Single Discretionary Allowance (SDA): Up to R1 million/year
  • Foreign Investment Allowance (FIA): R10 million/year (requires SARS tax clearance)

Failure to adhere to exchange control rules can result in severe penalties.

Record-Keeping and Declarations

Traders must maintain proper records of all trades, including:

• Dates of trade
• Currency pairs traded
• Entry and exit points
• Broker statements
• Profit/loss summaries
• ZAR conversion of profits

These are required for annual submissions to SARS, especially if you are audited.

Midpoint Training Resource

For South African traders looking to stay compliant while mastering the markets, consider enrolling in this Forex Course that covers not only trading strategies, but also touches on record-keeping, capital control limits, and tax awareness within a South African context.

Real Example

Sipho, a Johannesburg-based part-time forex trader, made over R80,000 in profits using an offshore broker. By maintaining accurate logs and using the SARS eFiling system, he declared his profits correctly. He avoided penalties and used his SDA to repatriate gains legally. His accountant also helped apply legitimate expense deductions like trading platform subscriptions.

Frequently Asked Questions

Do I have to pay tax on forex trading profits in South Africa?

Yes. All forex trading profits — local or offshore — are taxable and must be declared to SARS.

Can SARS audit my trading account?

Yes. SARS can request trading statements, bank records, and documentation to verify income, especially if you use offshore brokers.

Is forex income taxed differently if it’s a side hustle?

Side-income forex profits may be taxed under capital gains, but it depends on the frequency and intention of your trades.

What happens if I don’t declare forex profits?

Non-disclosure can lead to penalties, interest, audits, and possible prosecution under SARS regulations.

Can I deduct trading losses from my tax return?

Yes, but only if you’re classified as a trader conducting a trade. Casual losses generally aren’t deductible.

Conclusion

Forex traders in South Africa must take SARS obligations seriously. From declaring offshore profits to managing exchange control allowances, compliance is key. With the right knowledge and systems in place, you can stay on the right side of the law while building a successful trading career.