Every sale of property is subject to an investigation on all taxes, not just transfer duty or VAT. Conveyancers, sellers, buyers, estate agents, banks - in fact all parties, should be aware of the requirements and implications of the various taxation acts (such as the Income Tax Act of 1962 and the Value Added Tax Act of 1991) and their effects on the transfer of property.
It is therefore well worth remembering the following notes:
- FICA info - Do you have the relevant income tax numbers, if the party is not registered, why not?
- Is the seller registered for VAT or not - search the SARS website at http://www.sars.gov.za.
- Make sure the estate agent supplies the VAT registration number or the income tax number.
- If plot and plan is involved, ask the builder if he is registered for VAT and if so, what his VAT number is. Remember: if the seller and the builder are connected, transfer duty is paid on the total value of the plot and plan if the builder is not a VAT vendor. The test question is, "Can you separate the two transactions?"
- Ensure that the buyer and seller complete all the info. in the Deed of Sale.
- Occupation, possession and transfer dates are very important as each of these dates have different implications.
- For going concerns - ensure that the going concern clause is in the Deed of Sale, as one cannot later add addendums unless the Deed of Sale refers to them. Attach the asset list of the seller and attach the current leases of the seller. Remember: the seller sells the business with the property and the buyer must take over the seller's business - look at VAT Practice Note 14 of 1995, "Going concerns (section 11(1)(e) of the Act)". It is important to remember that one is only applying for a going concern and that SARS must still approve of it being such. If it does not comply with the Act, then it is not a going concern and 14% VAT will be payable.
- Note: a non vendor can also be deemed to be a VAT vendor - read section 7(1)(a) of the VAT Act.