Hard fork
Also known as: fork, chain split
A permanent split of a blockchain into two chains, sometimes giving holders new coins on the new chain with tax consequences.
Definition
A hard fork is a backward-incompatible change that splits a blockchain into two. Holders of the original coin may receive an equivalent balance of a new coin on the forked chain. Receiving new forked coins can be treated as income at their value on receipt, and that value becomes their base cost. Treatment varies by jurisdiction and by whether the new coin has a market when received. A coin you receive purely because you held the original chain, with no action on your part, is a fortuitous receipt under SARS' Draft Guide to the Taxation of Crypto Assets (1 July 2026): it is not gross income, and it opens at a nil base cost on capital account, or at market value under section 22(4) on revenue account.
Example
After a hard fork you receive new coins on the split chain. If you did nothing to earn them, you can record no income and the tokens open at a nil base cost. If they came from work you performed, their rand value on receipt is income and becomes the base cost for any sale.
Jurisdiction notes
- South Africa: Coins from a hard fork can be revenue income at value on receipt. A fortuitous receipt, where you did nothing to earn the new coin, is not gross income and opens at a nil base cost instead.