The SA Revenue Service has warned against cancelling property deals in order to cash in on the lower transfer duties that come into effect on March 1.
SARS spokesperson Adrian Lackay said: "It should be noted that, where a property transaction is cancelled for the purposes of avoiding or evading transfer duty, there is no true cancellation of the agreement and duty will be raised as if the original agreement had not been cancelled."
The Transfer Duty Act, 40 of 1949 defines "date of acquisition" as follows:
""(a) in the case of the acquisition of property (other than the acquisition of property contemplated in paragraph (b)) by way of a transaction, the date on which the transaction was entered into, irrespective of whether the transaction was conditional or not or was entered into on behalf of a company already registered or still to be registered and, in the case of the acquisition of property otherwise than by way of a transaction, the date upon which the person who so acquired the property became entitled thereto: Provided that where property has been acquired by the exercise of an option to purchase or a right of pre-emption, the date of acquisition shall be the date upon which the option or right of pre-emption was exercised;
(b) in the case of the acquisition of property in terms of item 8 of Schedule 1 to the Share Blocks Control Act, 1980 (Act 59 of 1980), and if section 9 of this Act does not apply to that acquisition, the date of the written request referred to in subitem (1)(b) of the said item 8;"
The relevant case in this regard is Secretary for Inland Revenue v Hartzenberg 1966 (1) SA 405 (A).
SARS explanatory note