Last week's Section 9(1)(i) has had a number of responses.
From Sara Scheiner:
In regard to whether a divorced/surviving spouse is exempt from payment of transfer duty when he or she acquires the half share of the ex or late spouse, if the legislature intended these transactions to be exempt from transfer duty, they did not express themselves very well. On an interpretation of the provisions of the Transfer Duty Act as it is, I think these acquisitions will attract transfer duty.
Whenever any person acquires rights in immovable property; be it ownership of the whole property or a half share, it attracts transfer duty.
Acquisitions by means of inheritance (whether the spouses were married in or out of community of property) are exempt, so I will not deal with the situation where one of the spouses has died and the other acquires the property by inheritance.
When people who are married in community acquire immovable property, they acquire it in the name of their joint estate. A joint estate is ONE estate, albeit with 2 "managers", so to speak. When the marriage ends on divorce, the spouses are then owners of an undefined half share of the assets of the joint estate in their own seperate individual names. Obviously, on divorce they can agree as to who gets the property, but one should not forget that this is still an acquisition of rights in immovable property as defined in the Transfer Duty Act.
So, if one person acquires a half share in a property from someone who happens to be his or her former spouse, it is still an acquisition as defined in the Transfer Duty Act.
As I said, I think it was the intention of the legislature to exempt divorce settlement acquisitions because of the reference to "surviving spouse" and acquisitions by inheritance are exempt anyway, so why else would they be lumped together.
Ek is oortuig daarvan dat die gade se aandeel vrygestel moet wees. Die bewoording van Artikel 9(1)(i) is dan in stryd met die bepalings van Artikel 45 (1) van die Akteswet waar daar net van "aandeel" in goed, kontrak of verband melding gemaak word.
I most certainly think this is an oversight by the legislator. Why would exemption be granted for transactions where the whole or a portion of a property is acquired but still require transfer duty to be paid where only a share is acquired. The exclusion from exemption does not really make sense.
One would have to look at the intention of the legislator when this exception was envisaged and granted, and I would submit that he certainly did not intend transfer duty to be paid when only a share is acquired.
Herman van der Merwe:
The whole provision must be read - it refers to the share of the former spouse "registered in the name of his or her deceased or divorced spouse" and it does not refer to the share in the property but only refers to the "sole ownership in the whole or any portion of property" of the former spouse.
And Thabo Nqhome
EXEMPTION FROM TRANSFER DUTY: SECTION 9 (1) (i) OF THE TRANSFER DUTY ACT 40 OF 1949
In her discussion ("the discussion") of the abovementioned subject, in an article published on page 13 of the March 2008 Issue No. 14 of the South African Deeds Journal ("the Journal"), Marie Grové's conclusion is to the effect that the abovementioned section ("the section") does not apply, where a surviving/divorced spouse receives transfer of a share of the other spouse, if the other spouse was a co-owner of a property with a third party and the third party's share is not being transferred to the surviving/divorced spouse. I do not agree because, in my opinion, the section has no bearing whatsoever to the third party's share.
It is curious to note that Marie Grové does not refer to, or distinguish, the shares referred to in section 45 (1) and/or section 45 bis (1) of the Deeds Registries Act 47 of 1937 ("the DRA"), which shares are not held by the other spouse jointly with a third party!
At the end of the discussion, the Editor of the Journal asks the question: "Is this an oversight by the Legislator? ….." For the reasons set out below, I do not find any fault with the section, which I view as clear, unambiguous and complete.
The main meaning of "property", in its definition in section 1 of the Transfer Duty Act 40 of 1949 ("the TDA"), is that it is "land in the Republic…… "In section 102 of the DRA, "land" is defined as including a share in land.
I agree with Marie Grové that "portion" means a defined portion of land. However, I do not agree that the acquisition of sole ownership in an undivided share in a defined portion of a property, (such as, for example, "Portion 11 of Erf 777 Cosmopolitan Township"), is excluded, provided, for example, that the surviving/divorced spouse acquires the sole ownership in the undivided share in such portion, which undivided share is registered in the name of deceased or divorced spouse.
The exemption does not apply to property which was previously acquired and transferred and in respect of which transfer duty was previously paid or from which payment of transfer duty was previously granted, which property is not being acquired by, and transferred to, the surviving or divorced spouse. Such property includes, for example, an undivided share held (and retained) by a surviving or divorced spouse and the undivided share registered in the name of a third party - refer to the first paragraph above. To this end, the crucial words in the section are "acquisition", "acquires", "that property or portion". As an oversimplification, it is noteworthy that the words "where that property or portion is transferred" cannot relate to an undivided share held (and retained) by a surviving or divorced spouse. The said words clearly relate to "the whole or any portion of property registered in the name of his or her deceased or divorced spouse", in the whole of which the surviving or divorced spouse acquires sole ownership.
In the section, the words "sole ownership" only mean that the property must be acquired by the surviving or divorced spouse alone; the word "whole" only means that the property acquired must be acquired in its entirety. Moreover, the property must be transferred to the "surviving or divorced spouse as a result of the death of his or her spouse or dissolution of their marriage or union" (my highlighting).
Section 9(1)(i) replies
Last week's Section 9(1)(i) has had a number of responses.
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