Transfer Duty Exempt Transfers - if you have a residential property in a company/close corporation or a trust and you want to transfer it into your name without incurring transfer duty, capital gains tax (CGT) and or secondary tax on companies, the time period to do so has just been extended to the end of 2012 by the legislature in terms of an amendment to the Income Tax Act. The tax relief applies to properties that are homes or residences for natural people and that have been used mainly for domestic purposes since February last year. The window period is to allow people with primary residences in companies or trusts to get rid of these entities as, due to changes to the Companies Act, the costs of holding their residences in these entities are becoming rather onerous coupled with their not qualifying for the primary residence CGT exemption. In terms of the amendments though, you will have to terminate the company or trust in which the property is held within six months of the disposal of the residence into your own name. In order to see if you qualify for such a disposal free of these taxes please call one of out proeprty law specialists.
FACT FOR THE WEEK Historically, SARS was legally required to refund a taxpayer the tax in dispute, together with interest thereon, where the taxpayer succeeded with a tax appeal. Interest was paid to taxpayers either where the Tax Court ruled in favour of the taxpayer or where SARS conceded the appeal before it was ruled on by the tax court.
However, where SARS allowed the taxpayers objection to an assessment, the law did not require that SARS refund the tax together with interest to the taxpayer. Under the “pay now argue later” rule taxpayers must pay tax in dispute first, unless SARS agrees to defer the payment of the tax, and then proceed with their dispute against the assessment.
Section 88A of the Income Tax act will now be amended to require that SARS pays interest on tax refunds to taxpayers when SARS allows an objection, and will also clarify as to when SARS will agree to defer the payment of tax in dispute.
If you buy a property within a 5 year period after the property was built, you should request the NHBRC (National Home Builders Registration Council) Enrolment Certificate from the seller. This Certificate warrants any residential dwelling against poor workmanship resulting in structural defects for a period of 5 (five) years. The National Home Builders Registration Council Act requires that all newly build residential dwellings are enrolled by any Developer, Contractor or Prospective Home Owner with the NHBRC, whether being built cash or through financial assistance by any legal bond holder and as it is an offense not to comply with the relevant legislation, the seller / bond holder should therefore be in possession of the original certificate. Our advise is that you make the NHBRC Enrolment Certificate a condition of your Offer to Purchase if you buy a new property and it falls within the 5 (five) years warranty period.
Purchasers who are not South African residents may apply for a mortgage bond from a South African bank equal to a maximum of 50% of the purchase price. The remaining 50% of the purchase price must be brought into South Africa in cash from a foreign bank. A non-resident's mortgage bond is furthermore subject to exchange control approval, as is a mortgage bond for a company, close corporation or partnership of which 75% or more is owned by non-residents
The provisions of the Consumer Protection Act will become effective as of 1 April 2011. Read our full article on our website
