Registration

TAX COMPLIANCE

SARS is using property transfers to ensure that, where applicable, the parties concerned are on the income tax and VAT register and the tax returns and taxes are up to date and queries regarding compliance purposes (including capital gains tax) have been satisfactorily answered. Every transaction is analysed according to risk for SARS purposes. Should we find there to be any outstanding taxes or any suspected risk issue, we will ask the party to contact us within 7 days. Should the party fail to contact us we will appoint the conveyancer as the agent of SARS to pay over the monies held by them (in the case of the seller and/or estate agent). In the case of the purchaser, we will hand the matter over to our collection department for further action.

We have received a number of queries with regard to the requirement to register for Income Tax. As a very broad and general guide, we have set out the below information. It should be borne in mind that in determining tax compliance we look at various factors. In order to prevent any delay in the issuing of the Transfer Duty receipt it is suggested that full disclose with regard to the financing of the property be given when application for Transfer Duty is made. This applies particularly to housewives and children buying or selling property. It also applies whenever a cash purchase takes place and the party is not registered for Income Tax.

I emphasis that the below tables is a VERY GENERAL GUIDE and should not be construed as being conclusive in any way as each case is viewed in its own merits. In terms of Section 69(3) of the Income Tax Act, 1962 (IT Act) we may call for any additional information. Section 66(1)(j) sets out one of the requirements to register for Income Tax and states that ‘every person to whom an income tax return is issued or who is requested by the Commissioner in writing to furnish a return, irrespective of the amount of income of that person.

I would also like to make it clear that this is simply my personal opinion and does not necessarily represent the view of the legal department of SARS.

Who must register for tax?

¨ Anyone earning >R60 000 taxable income annually;

¨ Anyone who receives allowances;

¨ If PAYE is deducted from your income;

¨ Any person or company whose gross income includes interest of R2000 or more;

¨ Directors of companies and members of cc’s;

¨ Any company (including cc’s);

¨ Any person required by the Commissioner to do so;

¨ Owner of business;

¨ Trusts and beneficiaries; and

¨ Commission agents and Contract workers.

Here are some frequently asked questions and answers.

SCENARIO	MUST THEY REGISTER?	WHAT SECTION OF ACT GOVERNS THE NEED TO REGISTER?
Buyer/ Seller whose remuneration is above R60 000 per annum	Yes	Section 66 (1) (c) read with Section 66 (3)(a)
Seller whose remuneration is under R60 000 and the property being sold is the primary residence and the seller is a South African resident.	No
Individuals purchasing property for income purposes (eg intend renting the property out) but whose annual income is less than R60 000.	Yes	Sec 66(1)(d)
Companies, cc’s and trusts whether buying or selling property.	Yes	Section 66(1) (a) Section 67 and sec.70
Non earning housewife selling/purchasing any residence.	Full disclose is required as to how the initial purchase/current purchase was financed.
Minor child selling/purchasing purchasing any property	Full disclose is required as to how the initial purchase/ current purchase was financed.
Non Resident buying property for holiday accommodation with no intention of renting the property out.	No
Non Resident buying property for income purposes.	Yes	Section 66(1)(d)
Non Resident selling property	Yes	Section 66 (1)(f)
Estate Agency	Yes	Section 66 (1) (d) and possibly section 7 (1)(a) of the VAT Act No. 89 of 1991

For ease of reference:

Section 66 (1) (c) “subject to paragraph 3, every natural person whose gross income for the year of assessment exceeded-

(i) R35 000 in the case of a person below the age of 65 years: or

(ii) R60 000 in the case of a person aged 65 years and older:”

Para 3 “A natural person contemplated in paragraph 2(c) is not required to furnish a return for his or her 2006 year of assessment, if –

(a) the gross income of that person consisted solely of one or more of the following-

(i) remuneration paid or payable to him or her which does not exceed the annual equivalent of R60 000 (after deduction of contributions to any pension fund and retirement annuity fund and, in the case of a person aged 65 years and older, any contributions to a medical fund) and from which only Standard Income Tax on Employees (SITE) has been deducted;

(ii) foreign dividends and interest from a source outside the Republic which do not in total exceed R2 000; and

(iii) interest income from a source in the Republic not exceeding-

(aa) R15 000 in the case of a natural person below the age of 65 years; or

(bb) R22 000 in the case of a natural person aged 65 years and older, reduced by any amount of foreign dividends and interest mentioned in subparagraph (ii) above, which is exempted from tax in terms of section 10(1)(i)(xv)(aa) of the Act; and (b) none of the provisions of paragraphs 2(d) to (k) apply in respect of that person.

Section 66(1) (d) “every natural person who carried on any trade in the Republic (other than solely in his or her capacity as an employee)”

Section 66 (1) (f) “every natural person who had any capital gain or capital loss exceeding R10 000”

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Andre de Villiers