Transfer Duty is payable on most fixed property transfers except where the sale is subject to VAT (see how this works here) and is the same whether the buyer is a trust, a person or a company. The rates are as follows- 2012 (agreement on or after 23 February 2011) Buyer Value Rate Any R0 – R600 000 0% Any R600 001 – R1m 3% on value above…
The taxes relating to sales of fixed property vary enormously depending on who or what is the buyer and who or what is the seller. They also depend upon whether it is residential property or commercial property and in the latter case whether the buyer and or the seller is VAT registered. The following diagram summarises just some of the possibilities. Should you wish to make an appointment, please feel free to visit Derek’s diary and book a time that suits you. . Need a shelf company or CC, a tax clearance, VAT registration or B-BBEE certificate? We…
The Stamp Duties Act was repealed with effect from 1 April 2009 so that lease agreements concluded from that date no longer needed to be stamped. The only remaining item that required stamps was the transfer of company shares and this duty now falls under the Securities Transfer Tax Act. STT is levied at 0,25% of the transfer consideration as before, but stamps are no longer used. The transfer must now be declared electronically using the SARSe-STT system. The company is liable to SARS to pay the STT within two months after the month of the transfer. The company may recover the…
In tax law the concept of Connected Persons arises frequently. They are sometimes defined specifically for a particular section of the Act so that the interpretation of the term “Connected Persons” is by no means easy. Typically, a taxable transaction between connected persons must be considered to have taken place at Market Prices rather than the actual transaction price. This is an obvious anti-avoidance mechanism and it is therefore important to interpret the definitions correctly. This article is, therefore, only a rough guide to the meaning of “connected persons” and is intended to alert you to the need to examine…
Owning investment property (that is property that earns rental) is one of the most important means of building passive income for retirement. However, it is most important that the property be owned in the right structure. This has been made easier now that Transfer Duty is the same for companies and trusts as for individuals, Unfortunately, there is no “one size fits all” and you really should get expert guidance before buying. Derek Springett provides this guidance at no charge. Click here to set up an appointment. Here are some general guidelines…
There are two principle reasons for forming a family trust (known as an inter vivos trust because it is formed during your lifetime). Firstly, the trust is a valuable estate planning tool as when you die, the trust does not die, so there is no Estate Duty payable on the trust assets and no CGT event. Secondly, the assets of a well formed and administered trust cannot be attacked by your creditors in the event of your bankruptcy. This diagram demonstrates both uses of the discretionary trust. Note that since this article was published, CGT for individuals has increased…
Intestate Succession If you die intestate (without having written a Will), your estate will be distributed “per stirpes”. This means that your spouse and children get one equal share each. In the absence of spouse and children, there are per stirpes formulae that will eventually find beneficiaries amoungst your siblings, parents, grandparents, grand children etc. Your minor children’s shares will go into the Guardian’s Fund to be administered for their benefit by the Master of the High Court. Wills You can get a will from your bank at no or very little charge. The reason they do this is to…
Although the Act was signed into the statutes in 2008 and despite the fact that the final date for implementation was 1 April 2011 there was a further delay. This is, no doubt, largely due to the state of chaos at CIPC. The Act was finally implemented on 1 May 2011. In order to read the new Act, one ideally needs two computer screens – one displaying the Companies Act 2008 and the other, the Companies Regulations 2011 which attempt to clarify the grey areas of the Act. First, let’s take a look at whether you need an audit or review – The regulations clarify the…
Zero-rated supplies A fairly wide range of basic foodstuffs together with diesel, petrol and illuminating paraffin are zero-rated as distinct from exempt. This means that the customer pays no VAT, but the supplier can, if VAT registered, claim input VAT because they are making VATable supplies (albeit at a rate of zero). Exports are also zero-rated. If a business is sold as a going concern by a VAT registered vendor to another VAT registered vendor along with the assets necessary for the business to continue as a going concern and as long as a number of conditions are…
Registration Because of the high level of VAT fraud SARS is making it increasingly difficult to register and the delay can be extremely frustrating especially for start-ups. For this reason registration is usually undertaken by professionals, such as Harbour and Associates, on behalf of their clients. However, this engagement takes a lot of partner time as is commensurately priced. Who must register Any business which is expecting to turn over in excess of R1m during the coming 12 months is required to register as a VAT vendor. Where the turnover figure is less than R1m but more than R50…
Cash versus Accrual basis Normally, vendors account for VAT on the accrual basis. That is, the VAT falls to account on the date of the relevant invoice. If the vendor has uncollected debtor balances at any time, then the debtors book contains VAT that has often already been paid over to SARS by the vendor, but not yet collected from the debtor. The converse is true in respect of the vendor’s unpaid creditors, but since debtors balances almost invariably exceed creditors balances, the VAT tied up can cause severe cash flow difficulties. Sole traders, partnerships and other unincorporated…
Tax Invoices A full tax invoice, which must usually be denoted in Rands, must contain the following – 1) The words “Tax Invoice” in a prominent place 2) The name, address and VAT number of the supplier 3) The name, address and VAT number (if registered) of the recipient 4) An individual serialised number and the issue date 5) Full description of the goods or services indicating that they are second hand if this is the case. 6) The quantity or volume of the supply 7) Either the value, the VAT thereon and the total or 8) The amount…
Output VAT VAT is charged by VAT registered vendors on most of their sales. They pay the VAT over to SARS as Output VAT (think of goods and services going OUT from the vendor). Input VAT VAT is claimed back from SARS by registered vendors as Input VAT (think of it as the VAT on goods and services coming IN to the vendor). Input VAT cannot normally be claimed in respect of certain supplies including entertainment, staff welfare, motor cars including twin-cabs. The VAT in bad debts written off can be claimed back as input…
There is no distinction in tax law between married couples and same sex and opposite sex life partners, they are all referred to as “spouses”. Therefore, although it is not strictly necessary, we recommend that all life partners who are not married should swear an affidavit (we are Commissioners of Oaths, so you can get that done at our offices) to the effect that they consider themselves to be life partners and that they attach the affidavit to their Wills. It is not necessary that the partnership survives for life, just as married couples can get divorced and terminate the…
The following table applies if the property is to be used by the purchaser to make predominantly VATable supplies – typically rental of commercial but not residential premises. . Should you wish to make an appointment, please feel free to visit Derek’s diary and book a time that suits you. . Need a shelf company or CC, a tax clearance, VAT registration or B-BBEE certificate? We offer a wide range of such services.
All South African residents are taxed on their world-wide income regardless of its source. If the income is also taxed in a foreign country then reference must be made to the Double Taxation Agreement between South Africa and that country to determine how the resident will be taxed. Exemptions Payment for services rendered outside South Africa if such a person was outside South Africa for at least a total of 183 days of which 60 days were continuous. Non-South African pension and social security payments. Who is a South African resident? A…
Registered micro businesses are taxed on receipts from turnover rather than profits. We are of the view that this is a terrible approach to taxation. Think carefully before deciding to register! The object is to simplify compliance and books of account need not be kept. Registered micro businesses must ignore capital gains and losses on sale of fixed property to the extent that it was used for business purposes. They must also ignore capital gains and losses on sale of other fixed assets used mainly (i.e. more than 50%) for business purposes. Who qualifies – Natural persons in business (or…
There are massive benefits in having your company or CC classified as a Small Business Corporation – most particularly a potential tax saving of approximately R90,000 every year. Here is how you qualify – 1) All members (shareholders) must be natural persons (i.e. no trusts or other companies). 2) No members may hold shares in any other private companies except dormant companies with less than R5 000 assets. 3) Turnover of the company and its subsidiaries must not exceed R20m. 4) No more than 20% of the turnover and capital gains may consist of investment income (such as property rental) and…
